Wealth Management & Wealth PreservationMulti award winning chartered financial planner
Having met many business owners and directors over the last few years, I was staggered to learn how many of them had never come across or even heard of a relevant life policy. If you are one of them, you are not alone so keep reading to learn how you could potentially save thousands on your personal life assurance.
Simply put, a relevant life plan is a single life assurance policy which provides death in service benefits for an individual up until a maximum age of 75. This is designed to provide a lump sum benefit on death during employment.
It is a death in service benefit paid by the employer with no tax consequences for the individual employee. There would be no tax and national insurance for the employee to pay and it is not classed as a benefit in kind which could also be subject to tax.
A lot of people are aware of the importance of life assurance and set up a policy to pay out a lump sum to their family in the event of their death. The monthly premium is paid out of personal wealth or salary that has been already been subjected to income tax and national insurance (NI), both on the employer and employee.
Imagine the annual premium was £1,000 and you are a 40% tax-payer. To pay the premium you would need a gross payment of £1,724.14, as income tax (£689.66) and NI (£34.48) would be deducted. On top of that the firm pay employer NI (£237.93).
Hang in there… this is a total gross cost of £1,962 which the company would get corporation tax relief on (£372.79).
Imagine you are the director of a limited company and paying for your own life assurance.
Total net cost = £1,589.28 per year for an annual premium of £1,000 per year.
Now imagine that same premium of £1,000 was in a relevant life plan. As it is paid by the business and should qualify as a business expense, there would be no national insurance, no income tax on the employee and corporation tax relief (£190) would mean that the net cost is dramatically less.
The net cost provides a saving of 49%! Over several years, the savings can run into many thousands.
Speak to a specialist in this field, like Fiducia Wealth Management, and find out ways to be tax-efficient and save money.
Employees, directors and salaried partners.
Typically, we set these up for directors who are also business owners.
It costs nothing to talk with us and find out what the premiums are likely to be.
If you are business owner talk to us today. There are a range of different plans that could safeguard your needs and those of your staff.
If you would like to know more about how we as Financial Advisers can help you secure peace of mind by ensuring your family are well protected in all eventualities then visit the Protecting Your Family section of our website: Protecting Your Family or send us email at: [email protected]
The information contained in our website is for guidance only and does not constitute advice which should be sought before taking any action. The information is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly, no responsibility can be assumed by Fiducia Wealth Management Limited, or any associated companies or persons, its officers or its employees, for any loss occurred in connection with the content hereof and any such action. Professional financial advice is recommended for every case.
Fiducia is a multi award-winning firm of Financial Advisers based in Dedham near Colchester situated in the heart of Constable Country on the Essex Suffolk border. www.fiduciawealth.co.uk
Fiducia Wealth Management Ltd. Dedham Hall Business Centre, Brook Street, Dedham, Colchester, Essex, CO7 6AD.
Fiducia Wealth Management Ltd. is authorised and regulated by the Financial Conduct Authority.. FCA No. 408210
