Tax efficient life cover, is that possible?

Traditionally life cover is paid for personally and out of taxed income. Not very tax efficient if you are a taxpayer. A Relevant Life Plan could be the answer. In most cases Relevant Life Plan premiums and paid benefits qualify for full Income Tax relief, National Insurance relief and Corporation Tax relief. A significant tax saving.

What is a Relevant Life Plan?

A Relevant Life Plan is an individual ‘death in service’ life policy. It is a term assurance plan designed to pay a lump sum benefit if the person covered dies or is diagnosed with a terminal illness during their employment, within the term of the plan.

Relevant Life Plans are similar to most other types of life cover but can be a very useful tax efficient alternative providing valuable death in service benefits for you

Added peace of mind tax free

The unique way in which Relevant Life Plan’s work mean you can effectively have the taxman help pay for the cover. While the cover is personal to you the policy counts as an allowable business expense so it’s tax deductible and doesn’t count towards annual or lifetime pension allowances.

What can you save?

A Relevant Life Plan could result in savings when compared with a typical life policy. In effect, because of income tax and national insurance contributions, traditional life policy premiums cost between 32% and 47% more than those deducted from your bank account. For example, in monetary terms paying a £40pm premium for life cover out of taxed income could be costing between £59pm and £76pm. As a relevant life plan is paid out of the business it could qualify for a 20% corporation tax deduction, reducing the cost of the premium from £40pm to £32pm and increasing the tax saving.

Why not give me a call today and I can discuss how a Relevant Life Plan could benefit you. If you have existing life policies, why not ask us for a free review to see if you can improve your tax position and potentially make premium savings too?

Please remember that tax law may change in the future and potential savings will depend on your individual circumstances.

If you need any help please don’t hesitate to contact us cassiedaems@cervellofp.co.uk or call us on 01708606202