Relevant Life Cover
A Relevant Life policy is a single life, stand-alone death-in-service plan, providing benefits on an individual basis.
- Tax advantages for directors, shareholders and employees of small limited companies
- Premiums are not taxed as benefit in kind
- Available for spouse’s or employee’s cover, if they receive remuneration from the business by way of salary, dividend or both
- Premiums are an allowable company expense for corporation tax purposes for the employer
- Cover ranges from 15-30 times annual salary and/or dividends, depending on age. Younger people can apply a higher factor of salary (but usually earn less so this creates consistency)
The various advantages of paying for your life insurance cover in this way :-
- Although the company pays the premiums, they are not taxed as a benefit in kind - which can offer huge savings, especially for a higher rate taxpayer.
- So while it's mainly aimed at high earners, a Relevant Life Policy can be suitable for any employee. What’s more, the payments are treated as an allowable expense for the employer in calculating their tax liability.
- This means it's also particularly suitable for small businesses that don't have enough eligible employees to warrant a group life scheme.
- HMRC consider the death benefits paid under a Relevant Life policy to be ‘excluded’ meaning they are excluded from Income and Capital Gains Tax.
Companies that offer Relevant Life Policies
- Legal & General
- Liverpool Victoria
- Royal London
- Scottish Widows
Current tax law
This is based on our understanding of current UK tax law and may change in the future