As a company director, you’re focused on growing your business and securing its future. But have you considered how to protect your own family’s financial security while maximizing tax efficiency? Relevant Life Insurance might be the solution you haven’t fully explored yet.
What Is Relevant Life Insurance?
Relevant Life Insurance is a tax-efficient life insurance policy specifically designed for business owners and company directors. It allows your company to provide death-in-service benefits to you and your employees on an individual basis, rather than as part of a group scheme.
Think of it as a way for your business to provide valuable life insurance coverage without the usual tax implications that come with traditional employee benefits.
The Tax Advantages You Need to Know About
Let’s face it – tax efficiency matters when you’re running a business. Here’s why Relevant Life Insurance stands out from other types of cover:
For Your Business:
- Corporation Tax Relief: Premiums are usually considered an allowable business expense, potentially qualifying for corporation tax relief.
- No Employer National Insurance Contributions: Unlike many benefits you provide to employees, you won’t pay National Insurance on the premiums.
- Not a P11D Benefit: The premiums paid aren’t treated as a benefit in kind, meaning neither you nor your employees face additional income tax.
For You and Your Family:
- No Personal Income Tax: You won’t be taxed personally on the premiums paid by your company.
- Inheritance Tax Efficient: The policy is written in trust, which means the payout goes directly to your beneficiaries without forming part of your estate – potentially free from inheritance tax.
- No Lifetime Allowance Issues: Unlike some pension-related death benefits, Relevant Life Insurance doesn’t count toward your pension lifetime allowance.
A Practical Example
Let’s say you’re a director taking a salary and dividends of £80,000 per year. You want life insurance coverage of £500,000.
With a personal life policy costing approximately £50 per month:
- You’d need to earn around £83 gross to pay £50 net after tax and NI
- The total annual cost to you would be around £996
With a Relevant Life policy costing the same £50 per month:
- Your company pays the premium directly
- The company could receive corporation tax relief
- The effective cost could be as low as £487 per year (assuming 19% corporation tax rate)
That’s potentially a 51% saving compared to funding personal cover from your post-tax income!
Is Relevant Life Insurance Right for You?
Relevant Life Insurance is particularly suitable if:
- You run your own limited company
- You’re a key person within a business
- Your company doesn’t have enough employees to qualify for a group life scheme
- You want to provide death-in-service benefits in a tax-efficient way
- You’re looking to reduce your overall tax liability while protecting your family
Expert Guidance Is Essential
While Relevant Life Insurance offers excellent benefits, setting it up correctly is crucial to ensure you receive all the tax advantages. That’s where specialized financial advice comes in.
Chris Goring from Renshaw Wealth specializes in helping company directors and business owners find the right protection solutions. With expert knowledge of business protection and tax planning, Chris can guide you through the process of establishing a Relevant Life policy that meets your specific needs.
Take the Next Step
To explore whether Relevant Life Insurance is the right solution for your situation, contact Chris Goring at Renshaw Wealth:
Phone: 0115-9445-777
Email: chris.goring@renshawwealth.co.uk
Website: www.renshawwealth.co.uk
Protecting your family’s future while optimizing your tax position is a smart business decision. Reach out today for a no-obligation discussion about how Relevant Life Insurance could work for you and your business.
Disclaimer: Tax treatment depends on individual circumstances and may be subject to change in future. The information provided is based on our understanding of current tax laws and HMRC practice as of [current date]. Please seek professional advice for your specific situation.