If you own a business, there’s a smarter way to buy life cover for yourself and your key employees. Relevant life Insurance is an individual death in service policy that allows an employer to provide tax efficient life cover for employees.
A relevant life policy pays out a tax-free lump sum if your employee dies or is diagnosed with a terminal illness during the policy term. The main purpose is to give financial protection to your employees, spouses, partner or dependants.
If you own a business, there’s a smarter way to buy life cover for yourself and your key employees. Relevant life Insurance is an individual death in service policy that allows an employer to provide tax efficient life cover for employees.
A relevant life policy pays out a tax-free lump sum if your employee dies or is diagnosed with a terminal illness during the policy term. The main purpose is to give financial protection to your employees, spouses, partner or dependants.
Unlike Group Schemes, HM Revenue and Customs consider the payment of premiums to be a business expense (so you don’t have to pay national insurance contributions)
You can choose:
– the amount of cover.
– the term.
– whether the cover is level or inflation-linked.
This will then be written in Trust, meaning that if the employee dies, the claim is paid free from Inheritance tax, to their beneficiaries.
Relevant life cover is arranged on an individual basis, with their company as the policy owner and the employee as the person insured. It is available to salaried employees who live permanently in the UK.
The aim is to provide a tax efficient benefit provided by an employer for an employee. There are a number of advantages to arranging relevant life insurance including:
The policy premiums may also be treated as an allowable expense for the employer in calculating their tax liability provided that the local inspector of taxes is satisfied they qualify under the ‘wholly and exclusively’ rules.
| Life policy | Relevant life policy | |
| Annual payment Employee tax NI at 2% |
£1000
£34 |
£1000
£0 |
| Income tax at 40% Employee Tax NI at 13.8% |
£690
£238 |
£0
£0 |
| Corporation tax at 19% | -£373 | -£190 |
| TOTAL COST | £1589 | £810 |
For more information and a free quote from a dedicated Protection Consultant, please call Stacey on 01270 758057 or click link below.
R.K. Henshall © 2024
R K Henshall & Co Ltd are Independent Intermediaries and are authorised and regulated by the Financial Conduct Authority. Registration Number: 308865. Directors: J.R. Henshall B.A.(Hons) ACII Cert CII (FS), A.J.Simpson ACII, A.Brown FCCA. Written quotations, policy terms, conditions and exclusions are available on request.
Company Secretary: A.Brown FCCA. Registered No. 01285024
R K Henshall are very proud to support Lupus UK. Lupus UK is a charity very close to our hearts. Unfortunately, Nita Davies who had been a stalwart of our company from it’s very beginning lost her battle against this terrible illness in 2013. Lupus UK is the only National Charity which supports people with the immune system illness. (Registered charity nos. 1051610, SC039682) Click here to read more about Lupus UK.
