Benefit-In-Kind and Life Insurance

As a small business owner, it feels like anything we pay for through the business has a benefit in kind attached. If we pay for a meal at lunch time, benefit in kind, if we pay for private medical insurance, benefit in kind, electric cars, benefit in kind, but there is one expense that is often overlooked where there is no benefit in kind, and that’s life insurance.

What most people don’t realise

Most directors in the UK don’t realise that you can pay for your personal life insurance as a business expense and there is zero benefit in kind charge and not only that, but your company can claim corporation tax relief on the premiums paid as well.

If you have a personal life insurance policy already you will be paying the premiums from net income. So, your business will have paid corporation tax, then you pay further dividend tax when you withdraw the money to pay for your premiums.

The type of policy you need

With the right policy, the business pays the premiums, so you don’t need to take out that extra income. This saves you the dividend tax you would otherwise have paid. The business then gets the advantage of saving corporation tax relief as well.

The result is a 64% saving in tax for a higher rate taxpayer that usually ads up to tens of thousands of pound of tax-relief over the life of the policy.

Relevant life insurance

So, what is this super tax efficient policy? It’s called relevant life insurance, and it’s been around for nearly 20 years.

Your accountant might not know about it as they are not qualified to sell insurance.

Your mortgage adviser might not have mentioned it because they sell personal life insurance not business,

That leaves us, a business life insurance specialist that’s tyring to educate business owners on how to be as tax efficient as they can be.

Can you benefit?

So if you’re a UK business owner that wants to save some tax and be one of the few that understands which expenses should be a business expense and which shouldn’t be, get in touch with our team today and find out if your business qualifies.