Save Tax And Protect Employees With Relevant Life Cover
Did you know there is a kind of life insurance out there that could save you and your company a significant amount of business tax and protect your employees? It’s called Relevant Life Cover, and many people are unaware of how it works and are currently missing out on the benefits it provides.
What is Relevant Life Cover?
Relevant Life Cover is paid for by an employer to protect the employees. The policy pays out a lump sum to an employee who suffers death in service or is diagnosed with a terminal illness. It is available not only to regular employees but salaried directors as well. Therefore it’s a useful policy to have for many business owners looking for personal and business protection, and especially for those looking to save on tax.
How can an employer benefit?
Relevant Life Insurance allows the policyholder to pay for their personal life insurance through a business, which means it counts as a tax-deductible business benefit. Therefore, there is an immediate saving of 20% to be made on your business tax bill, through corporation tax relief.
It also means company directors who pay the 40% tax rate on their income could save up to 52% on life insurance premiums, so over 25 years, someone with a £50 per month personal life insurance plan could end up saving £7,800!
Employers also pay no national insurance contributions on the payments used to fund the Relevant Life Cover policy.
Can employees also save tax with Relevant Life Cover?
Yes, it’s not just company owners that can save through this kind of cover – there are also many benefits for employees with this form of life insurance. For a start, there are no national insurance contributions to be paid on the money used to fund the policy. The money paid into the relevant life cover policy does not count against your personal allowance, providing even more savings. Furthermore, the policy benefits are also generally free from inheritance tax, which means there are potentially large savings to be made there, which is especially helpful during difficult times.
How else can your business benefit?
Small or medium sized businesses which are unable to qualify for a group life scheme can take advantage of this kind of business protection instead. There is actually an added benefit for taking out life insurance this way in comparison with a group life scheme – a group life scheme is included in pension legislation, meaning a payout is included as part of the employee’s pension fund, but with claims made through a Relevant Life Policy, this isn’t the case. The taxman doesn’t count these insurance premiums as a benefit in kind, so they do not fall under P11D regulations either.
With all these potential savings arising from this kind of tax-efficient policy, along with all the protection it offers your employees, it’s definitely worth exploring further. Find out if Relevant Life Cover could benefit you and your business by talking to the specialists at Business Cover Expert.