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Company Director? High-Earning Employee? This May Be Relevant To You!
Until recently company directors who wished to provide personal life insurance for themselves paid for it either personally out of pre-taxed income or via their company, in which case they were penalised by way of a P11D benefit-in-kind (BIK). Furthermore a company would have had to take out group insurance in order to provide some form of personal life insurance, requiring at least 10 employees be registered on the scheme.
It is now the case that companies are able to provide life insurance policies to employees individually, and without the BIK problem, so long as those policies fall under the criteria of a relevant life policy.
By switching to paying for personal life insurance via a relevant life plan through the company a basic-rate tax-paying company director can look to save around 36%. This saving rises to 49% for those in higher-rate. Due to the significant savings to be had from such policies they are becoming more popular and an increasing number of insurance providers are offering relevant life plans.
The two main groups of employees who should be interested in relevant life plans are company directors who wish to provide themselves death in service benefits without having to take out policies for other employees, and also those high-earning employees where the death in service does not form part of their lifetime allowance (£1m 2016/17). Larger incorporated businesses may also wish to take out death in service policies for only a small group of their staff.
Those smaller companies whose only two directors are husband and wife are able to take out cover for both parties, taking into account their individual needs.
If you think you might benefit from your company providing you with a relevant life policy and you want to discuss this further please do not hesitate to contact Towers + Gornall on 01995 600600 or at firstname.lastname@example.org.