Watts Mortgage and Wealth Management

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Relevant Life Plan

Relevant Life Plan

What is Relevant Life Insurance?
 
Relevant life insurance is a tax efficient way of a company providing life insurance for its employees, including directors of limited companies. Put simply, rather than the directors paying for their life insurance from their net salaries, with monies already taxed at a company and personal level, the limited company can pay for the premiums from its gross income.
 
What is the tax treatment of these policies?
 
Premiums are treated as an allowable business expense by HMRC. With Corporation tax relief available, and no additional income tax or NI to pay, the savings to be made by writing insurance in this manner are huge. A basic rate tax payer will save 40% of the cost, with the saving rising to almost 50% for a higher rate tax payer. The company will own and pay for the policy, and it is written into a trust to ensure that the benefits of the policy are paid out to those who you wish it to go to, without delay.

                                                                                           
How a relevant life policy can cut company costs
Premium Ordinary life coverRelevant Life Policy
£1,000£1,000
Company gross costEmployee’s National Insurance contributions at 2% £34Nil
Income tax @ 40%£690Nil
Employer’s National Insurance contributions at 13.8%£238Nil
Total gross cost£1962£1,000
Company net costCorporation tax relief at 20%£392£200*
Net cost £1,570£800*

Source: Royal London *Assumes that corporation tax relief at 20% has been granted under the ‘wholly and exclusively’ rules. In both cases we’ve assumed a payment of £1,000 each year for the life cover on an employee who’s paying income tax at 40% and employee’s National Insurance at 2% on the top end of income. We’ve also assumed that the employer is paying corporation tax at the small profits rate of 20% and will pay employer’s National Insurance at the contracted-in rate of 13.8%

To know more about protection then simply gives us a ring on 01270 620555, or email us at .(JavaScript must be enabled to view this email address) and one of our team of Protection Specialists will give you a call straight back.


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Many thanks to Sian for the expert advice when I wanted to remortgage my buy-to-let portfolio. Your whole market approach and willingness to go the extra mile to secure the best deals for each property has enabled me to significantly reduce my repayment costs and provided stability for the next five years. Thanks also to Emma for the swift and efficient way that my mortgage applications were processed and for your clear communications that kept me informed throughout the process.

Mr O Mason

protection

life &
critical illness

With advances in medical care more and more people are now surviving illnesses once thought to be fatal.

life
insurance

Protection insurance is designed to help when the things we hope will never happen to us, do!

income
protection

Protecting your future is important and Income Protection can protect your income and make sure that money is there when you need it most.

accident, sick &
unemployment

This cover can give you the peace of mind of knowing that in the event of redundancy or illness your mortgage payments will be made.

building &
contents

Your home is probably the largest single financial commitment you will make in your lifetime, so protecting it is so important.

private
health

You insure your car, your home, and your valuables - isn’t your health the most important asset of your life?

relevant
life plan

Relevant life insurance is a tax efficient way of a company providing life insurance for its employees, including directors of limited companies.

director shareholder
protection

Directors’ shareholder protection is insurance that is specifically designed to ensure that should one the shareholding directors die or be diagnosed with a terminal illness the remaining shareholders will have access to sufficient capital to buy the deceased’s shares from his/her estate.

keyperson
insurance

Key person insurance helps safeguard a business against the financial effects of the death or critical illness of a key member of staff

mortgage tools

Calculators to help you plan your mortgage payments and stamp duty rates.

testimonials

Read what some of our existing clients have to say about our services.

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Your initial mortgage consultation is obligation free. There will be a fee for mortgage advice of £695 of which £95 is payable when you apply, and we retain the commission from the mortgage lender. The precise amount will depend on your circumstances and mortgage loan amount, and will be discussed and agreed before you make a mortgage application.

Watts Mortgage & Wealth Management Ltd is directly authorised and regulated by the Financial Conduct Authority.

We are entered on the Financial Services Register No 624815 at www.fsa.gov.uk/register/home.do

More information is available on mortgages from the Money Advice Service. www.moneyadviceservice.org.uk

Where you have a complaint or dispute with us and we are unable to resolve it to your satisfaction then we are obliged to offer you access to the Financial Ombudsman Service. Please see the following link for further details www.financial-ombudsman.org.uk

Your property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

For details of our fees for mortgage business please click here.

The FCA does not regulate some forms of mortgages. The FCA does not regulate taxation advice, trust advice and some forms of buy to let mortgages.