March 5th, 2020

Saving tax – with a life insurance policy



This is an insurance policy that a company takes out to provide a ‘death in service’ benefit to employees.  It is a very tax efficient way of paying for any life insurance that you may need – especially if you are a higher rate tax payer.

For example, if you currently pay £50 a month for life insurance personally here’s what’s happening with tax behind the scenes:


Company profit£91
Corporation tax£17
Available for dividends£74
Higher rate tax£24
What you’re left with£50

If the company takes out a Relevant Life policy instead then the company would pay the £50 cost and get corporation tax relief too.  This means the real cost to the company is just £40.  You’re getting a tax saving of £51 every month on a policy only costing £50 to begin with.  And with many life policies running for a long time you could save over £12,000 over 20 years.

Here’s a few final points:

To discuss how a Relevant Life policy could work for your company then please get in touch.

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John manages a wide portfolio of owner managed businesses and oversees the smooth operation of the firm’s payroll department.

After obtaining his degree in mathematics from the University of Liverpool, John joined Jonathan Ford & Co in 2004 and qualified as a chartered accountant four years later. John likes to keep abreast of developments in tax and accounting and is responsible for the mentoring of junior staff.

Outside of work, John enjoys powerlifting and is a Liverpool FC season ticket holder.

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