Could your Life Cover be more Tax Efficient?
If you are a Company Director looking to provide Life Assurance to help provide financial security for your employees, or your own loved ones, then there is a way of paying premiums in a more Tax Efficient way.
As the premiums are paid by the company, they are usually considered as a business expense and are not treated as a benefit in kind so:
- as the policy premiums are treated as a business expense they are likely to be an allowable deduction against Corporation Tax
- there is no liability for National Insurance for employers or employees on the policy premiums
- there is no liability for employees to pay Income Tax on the policy premiums
- the death in service benefits are paid tax free to the nominated beneficiaries
- the death in service benefits do not form part of an individual’s lifetime allowance for pension savings
- the policy premiums do not form part of an individual’s annual allowance for pension contributions
So, taking out a Relevant Life Policy could be a tax efficient solution to provide valuable death in service benefits for individual employees:
- where the number of employees is too low for a company group scheme or,
- who may require more life cover than the main Company scheme provides.
Please remember that tax treatment depends on individual circumstances and may change in the future.
If you would like to discuss the benefits of paying Life Assurance through your company then I am happy to have a chat to explain it in more detail. www.eurekafs.co.uk