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


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

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

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.


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

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