What is Relevant life insurance?
Relevant life insurance is an insurance policy that a business can take out to provide life insurance for an individual employee.
The policy is applied and paid for by the business, and is written into trust from outset so it pays out a lump sum to the employee or their beneficiaries if they die or are diagnosed with a terminal illness while employed during the policy term.
It complies with relevant life insurance legislation that makes it tax-efficient for the employee, their beneficiaries and the business, making it a valuable extra benefit that can be used alongside, or instead of, a group life insurance scheme.
How is it tax-efficient for the employee?
HMRC usually views the premiums as an allowable business expense for the employer and not a benefit- in-kind for the employee, so the employee does not have to pay Income Tax or National Insurance on the premiums. For a higher or additional rate taxpayer, this can be a significant saving.
How is it tax-efficient for the business?
Your company can claim tax relief on the premiums as these will be an allowable business expense. Therefore, your company will save 19% corporation tax on the monthly premiums. In addition, the benefits are written into trust on behalf of the employee so they are not viewed or taxed as business assets.