If you are a company director, you will no doubt be keen to understand how the taxman is prepared to help pay for you to protect you and your family should the worst happen.
Senior Ludlow consultant, Terry Cosgrove, explains:
“The majority of company directors I work with have life insurance cover in one form or another but few appreciate you can arrange this cover through their business and get very attractive tax concessions at the same time.
“If you have life insurance cover personally and you pay for it out of your salary and/or dividends after tax has already been deducted this can be a very inefficient way of paying for cover.
“Larger companies can avoid this by introducing ‘group death in service cover’. This is a highly tax-efficient way of providing life insurance, but is not generally available for smaller companies.
However, recent changes in legislation have allowed small companies to benefit from this arrangement by taking out ‘relevant life policies’. These can be set up on an individual basis meaning they are available to all companies no matter how small.”
The tax benefits of a Relevant Life insurance policy are:
• Payments are made by the company with no benefit-in-kind charge back to you
• No National Insurance payable on the cost
• The cost of the insurance can be deducted as a business expenses against corporation tax
• If you died the lump sum can be paid tax free to your family
If you would like more information on how this valuable tax concession can be arranged contact your consultant on 01704 500 324.