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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by
Managing Director

Jonathan trained as a chartered accountant with Price Waterhouse (now PWC) in Liverpool before becoming a small business services manager for Grant Thornton in Warrington. He also spent three years as the financial controller for Brookside and Hollyoaks (not that he ever mentions it!).

Jonathan is recognised as a specialist in the entertainment industry and is often called upon to provide training courses and seminars for media professionals. He's also a bit of a technology geek and has been recognised with the accountancy industry as one of the most progressive accountants in the UK.
Outside of work Jonathan is very proud to be the Treasurer of the Tim Parry Johnathan Ball Foundation for Peace and to be on the Council of the Liverpool Institute of Performing Arts (LIPA)

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