What Is Relevant Life Cover?
Relevant life cover is a life insurance policy paid for by your limited company. It provides a tax-free lump sum to your family if you pass away during the policy term.
Unlike personal life insurance, the premiums are paid by your company and are typically treated as an allowable business expense, meaning they don't attract Corporation Tax, Income Tax or National Insurance.
Why Is It Tax-Efficient?
- Corporation Tax relief, premiums are usually an allowable business expense
- No benefit in kind, unlike many employee benefits, relevant life cover doesn't count as a P11D benefit
- No National Insurance, no employer or employee NI contributions on the premiums
- Tax-free payout, when written into trust, the death benefit is paid free of Income Tax and Inheritance Tax
Who Can Benefit?
Relevant life cover is available to employees and directors of limited companies. It's particularly popular among:
- Company directors who take a low salary and high dividends
- Small business owners looking for tax-efficient protection
- Companies that want to provide death-in-service benefits without setting up a group scheme
How Much Cover Can You Get?
The amount of cover available depends on your total remuneration (salary plus dividends) and your age. Typically, you can arrange cover of up to 15-20 times your salary, subject to insurer limits.
Next Steps
If you're a company director, relevant life cover is worth considering as part of your overall protection and tax planning strategy.
Book a consultation to discuss relevant life cover, or visit our business protection page for more information.
Want to discuss your protection needs?
Book a free consultation with a specialist adviser.