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Relevant Life Cover

Relevant Life Cover

Relevant Life plans are individual life assurance policies that company directors can buy through their business if they are classed as an employee. They are a way of providing death-in-service benefits on an individual basis, no matter how small your business is

 

Who is covered?

  • Employees of a small business that doesn’t have enough eligible employees to warrant a group life scheme
  • High earning employees or directors who don’t want their benefits to form part of their lifetime allowance
  • Members of a group life scheme who want to top up their benefits

Note: Relevant Life plans aren’t suitable for self-employed or equity partners

 

Who benefits

Although the company pays the premiums, the benefits are normally restricted to family members and dependents.

 

How does it work?

The premium payments may be treated as an allowable business expense for the company subject to meeting the requirements of the local inspector of taxes. Terms and conditions will apply and cover options will depend on your specific circumstances. Please contact us for an initial discussion of your requirements

 

Calculating the savings

 

 

Ordinary Life Plan

Relevant Life Plan

Annual Premium

 

£1,000

£1,000

 Employee Tax

National Insurance

(2%)

£34

£-

Income Tax

(40%)

£690

£-

 Employer Tax

National Insurance

(13.8%)

£238

£-

Corporation Tax Relief

(19%)

-£373

£190*

Total Gross Cost

 

£1,589

£1,000

*Assumes that corporation tax relief at 19% has been granted under the ‘wholly and exclusively’ rules. In both cases we have assumed a payment of £1,000 each year for the life cover on an employee who is paying income tax at 40% and employee’s National Insurance at 2% on the top end of income. We have also assumed that the employer is paying corporation tax at the rate of 19% and will pay employer’s National Insurance at the contracted in rate of 13.8%.

**based on our understanding of tax law and practice as at August 2017