When it comes to life assurance, a major benefit of being a company owner is the ability to obtain that life cover tax-efficiently through the company. This type of cover, called ‘relevant life assurance’, provides the owners, directors and employees of a small business with life cover that offers financial protection to their families in the event of death. As the premiums are paid through the business it can help to save tax.
A relevant life insurance policy is applied and paid for by the business with the employee or director is the life assured. The policy is written in trust, so it pays out the benefit into the trust for the employee’s beneficiaries if the employee dies or is diagnosed with a terminal illness during the term of the policy.
Although the premiums are paid for by the business, the premiums are not treated as a benefit-in-kind, so no Income Tax or National Insurance on the insurance is payable for the premiums paid on the employees’ behalf.
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