Ben Rogers of Power Mortgages Ltd (www.powermortgages.co.uk) gives the low down on Relevant Life, a type of life assurance plan which is paid for by your own Limited Company so works in a more tax efficient way than a standard life assurance policy.
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 Plan’s 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 as a Company Director and any employees of your Limited Company.
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, doesn’t count towards annual or lifetime pension allowances and is not classed as a benefit in kind.
Premiums paid to a qualifying Relevant Life Plan will be tax deductible for the Employer and will not be assessable on the Employee. The sum assured when paid will not be subject to income tax either, nor will it be included in the taxable estate of the Employee for inheritance tax (IHT).
This means that it can represent an excellent way of providing life assurance cover for Employees and Directors payable to their family and dependants on death or terminal illness
What can you save?
A Relevant Life Plan could result in savings for a business when compared with a typical life policy. Premiums could be reduced by up to 49% if you’re a higher rate taxpayer and up to 40% for a basic rate taxpayer.
Who can have a Relevant Life Policy?
A Relevant Life Policy is only available to Employers (whether trading through a partnership, a limited liability partnership (“LLP”), a limited company or as a sole trader) who are applying for a new Policy on the life of an employee of theirs.
The term “Employee” includes a director and an officer of a company but does not include a partner in a partnership, a member of an LLP or the sole trader. Therefore any Contractor who contracts through their own Limited Company is eligible for a Relevant Life Plan. The cover would be taken out on you, the employee and the plan would be in your Limited Company’s name.
To find out more about the plan or get a personalised illustration please contact Power Mortgages on 02380 633415 or email email@example.com: you can also find out more about Power Mortgages and request for a specialist Protection Advisor to contact you through their website www.powermortgages.co.uk
Power Mortgages Limited is an Appointed Representative of Personal Touch Financial Services Limited which is authorised and regulated by the Financial Services Authority.
Power Mortgages will not charge a fee for advising and arranging Term Assurance, Critical Illness, Mortgage Payment Protection, Income Protection Insurance, Payment Protection Insurance, and Household Insurance.
Power Mortgages also advise and arrange mortgages and specialise in placing mortgages for contractor based upon a multiple of the contract rate.
Power Mortgages normally charge a fee for mortgage advice upon completion. The amount will depend on your circumstances, but a typical fee would be around £499.
(NB: YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.)