Life Insurance as a Tax Free Benefit

Life Insurance as a tax free benefit is something which many business owners seem to overlook.

Recent changes have been introduced to allow Limited Companies to take out personal life insurance. The premiums paid will attract corporation tax relief and will have no taxable benefit for the Directors and employees concerned. They will also have no tax to pay on any payout under the scheme in most cases.

These policies are called Relevant Life policies. They do have some restrictions compared to normal life insurance – for example the maximum age for a relevant life policy cannot exceed 75.

However, the advantages in having the company pay the premiums and obtain corporation tax relief compared to contributions being paid by Directors’ personally from tax paid income are potentially both significant over the lifetime of such a policy and understandably attractive.

Introducing Cullen Wealth

A brief summary of the Key Facts of these policies are set out below. As ever with any matters of a financial planning nature like this expert advice should be sought from your IFA. We would be pleased to introduce you to our Sister company, Cullen Wealth. They are one of the largest independent financial planning companies in the UK if you do not have a strong relationship with an advisor already in place..

  1. Relevant life premiums are not a taxable benefit for the director/employee
  2. Corporation Tax relief is available for the premiums in most cases
  3. Any payout under a relevant life policy will be tax-free
  4. Inheritance Tax savings are also possible
  5. Significant tax savings compared to Keyman or personal life insurance

 

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