Relevant Life Policy

Let the tax man help pay for your life cover


If you are a company director and you have life cover to protect your family, you could be paying more tax than you need to. Changes in legislation have allowed small companies to benefit by taking out ‘relevant life policies’.

These can be written on an individual basis so are available to all companies no matter how small.


Who is this type of policy for? 

Directors of a company.

High-earning employees who have substantial pension funds and don’t want their death-in-service benefits to form part of their lifetime allowance.

Small businesses that don’t have enough eligible employees to warrant a group life scheme are now eligible for Relevant Life Policies.


What are the advantages?

  • Payments are made by the company and are not treated as a benefit in kind.
  • No National Insurance implications and excluded from your annual or lifetime pension allowance.
  • May be treated as an allowable expense for the company as long as they qualify under the “wholly and exclusively” rules.
  • Tax-free benefits to your dependants, payable through a discretionary trust.



How Much Will I Save?

  • Basic Rate Tax Payer (20%) – 40% Savings compared to personal premium
  • Higher Rate Tax payer (40%) – 49% Savings compared to personal premium
  • Highest Rate Tax Payer (50%) – 58% Savings compared to personal premium 


Working Example: If your annual premium was £600 a year on a relevant life policy, the equivalent gross premium would be £1,177 a year as a personal policy.


*We are not tax advisers and would strongly advise you to speak to a suitably qualified person to discuss your specific tax benefits.


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