Being a limited company owner we don’t get sick pay, we don’t get death in service or company perks without it attracting TAX. Buying life insurance from our wages is not the most efficient way to protect our home and family.
Many business owners don’t know that there are tax efficient life protections called “Relevant Life Insurance” which allow the company to protect the key staff without it being classed as a taxable perk! (ZERO p11D impact). In the event of claim or terminal illness is diagnosed the protection would always pay the nominated (family not the limited company) So it is reminiscent of a death in service protection.
The big win for the insured and the company is the efficiency of this product in multiple areas. Many have said that a domestic life insurance of £100 could actually look like a unit cost of £158.62 per month due to the impacts of Income tax, National insurance and loss of other monies to receive the £100 as wages. But because “relevant live” is paid by company these are not applicable to the protection; Moreover, the company can offset this as a business expense therefore reducing the limited companies Corporation tax liability. This would mean the £158.62 per month could look like £81 per month if we obtain the solution via limited company!
Please note: don’t just get the limited company to pay for your life and critical illness protection(s) as this will be seen as a benefit in kind and you will be taxed on this!
This protection goes one step further and would be exclusive to the Lifetime allowance calculation. The lifetime allowance is made up of the amassed pension and any life insurance(s) at that time. Which if we breach monies over £1073,000 we are taxed at 55%. Again, Relevant Life protection does not form part of the Lifetime allowance calculation. This in its own right can save families ten’s of thousands of pounds.