November 22, 2018Comments are off for this post.

5 facts Contractors should know about Relevant Life Insurance

We talk to Contractors every day, so we know that your biggest priority in life is protecting your loved ones. But when you work for yourself, you can lose out on the benefits, such as sick pay and death in service, that ‘traditional’ employees provide. As a Contractor, if you own a limited company, and already have life insurance in place, you should consider switching to Relevant Life Insurance as it’s tax efficiency could save you money. We have found the top 5 facts about Relevant Life Insurance that all Contractors should know.

5 facts about Relevant Life Insurance

 

1. Relevant Life Insurance is taken out by the limited company rather than the Contractor

Unlike standard life insurance that you pay for out of your own pocket, the monthly premium is paid for by a limited company and will cover a particular employee such as yourself. If you were to unfortunately die, the lump sum will be paid to your beneficiaries.

 

2. It’s not a benefit-in-kind

You do not have to declare Relevant Life Insurance on your P11D at the end of the tax year as it is not treated as a benefit-in-kind. It is considered a company expense, so you won’t lose any of your tax-free allowances and your company will enjoy the corporation tax relief on the premiums.

 

3. No income tax and, usually, no inheritance tax on the payout

As well as being tax efficient to pay for, Relevant Life Insurance is tax efficient when paying out. There is no income tax to pay as it is classified as a business expense and, when placed into a trust correctly, your family could benefit from not paying inheritance tax if the worst was to happen.

 

4. Your lifetime allowance for pensions is not affected

Relevant Life Insurance does not count toward your pension lifetime allowance. You can accumulate up to £1.03 million (for tax year 2018/19) into your pension pot before you have to start paying tax. Unlike lump sum payments from a pension scheme, payments made from Relevant Life Insurance are not included in your pension lifetime allowance.

 

5. No payout if the policy is cancelled

Because Relevant Life is a form of insurance, Relevant Life cover will stay intact for as long as your limited company keeps up the payments and the conditions of the policy is not breached - if you change your mind this is no surrender value.

 

The are endless benefits to switching your life insurance to Relevant Life Insurance but it is important that you select a policy that is right for you and your loved ones. If you are looking for an expert adviser who understands Contractors, we can help.

April 8, 2018No Comments

Looking for more tax-efficient life cover?

While Directors and employees within large companies can take advantage of group life schemes and death in service, individuals like Contractors will most likely be paying for personal life insurance out of taxed income.

This no longer needs to be the case!

By switching to a Relevant Life Cover policy, Contractors could save over 50% on their personal life cover. How? Well, put simply, a Relevant Life Cover policy is an effective way of getting personal cover paid by a company, as a business expense, rather than through taxed income via a more traditional policy.

This tax-efficient method retains the same level of cover but can save the likes of Contractors a considerable amount through savings in National Insurance, Income and Corporation Tax.

To see how, take a look at our example below which highlights how John, a UK-based Contractor, saved 57.82% on his monthly premium costs:

Monthly Premium: £60
Income Tax Rate: 40%
Length of policy: 25 yrs

 

Traditional:
The total monthly cost to John and his company: £113.80

(Includes: Premium cost, employee NI contribution, income tax, employers NI contribution and Corporation Tax Rebate)

 

Relevant Life Insurance Plan:
The total monthly cost to John and his company: £48.

(Includes: Premium cost and Corporation Tax Rebate)

 

Total monthly saving to John and his company = £65.80

Total lifetime saving of Relevant Life Plan = £19,740

 

John could also extend the policy to other staff, for example, a spouse if they currently receive a salary from the company.

To find out more about Relevant Life Insurance and how it can help you save £1,000s, contact the Relevant Life Expert team.

April 8, 2018No Comments

Why Relevant Life Insurance makes sense for Contractors

When you’re working as a Contractor and running your own company it makes sense to pay for as many legitimate businesses expenses as you can through it. Most people pay for life insurance out of their own pocket, unless they work for a company that offers group life schemes or death in service benefit.

Read more

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