The importance of life cover for key employees, including directors and director/shareholders cannot be over emphasised. Of course, the more valuable the employee, the more expensive the premium is likely to be with a good rule of thumb for life insurance cover being 7 x annual salary.
However, one benefit of the current tax regime is that life cover, if taken out by the company, can be treated as an expense for tax purposes and is therefore allowable against corporation tax.
For this to work, the company must be limited liability and the legislation does have some limits to qualify for the tax concessions, and to ensure these are met, it requires that:
- The cover must be paid in a single lump sum before the age of 75
- Only Death & Terminal Illness benefits can be provided
- Benefits must be paid through a discretionary trust
- Beneficiaries are normally restricted to family members and dependants.
It is also important to consider putting your life cover in trust so that any payments made under your policy are made quickly and are excluded from your estate for the purposes of Inheritance Tax.
For more information speak to a life cover adviser on 01628 507477 or contact us .
Recent posts
Autumn Budget 2025 Predictions: Mortgage Market
11 days ago
The chancellor will deliver her second budget this autumn. Due to slow economic growth and high inflation, the government need to manage a £40 billion shortfall in public finances. There have already been reports about changes to taxes including income tax and capital gains tax.
Landlords could face a new tax this autumn
14 days ago
The chancellor has advised that landlords could have another tax to pay this autumn as the Treasury decide whether to extend national insurance contributions to rental income.
According to a report in the Guardian, senior ministers have asked Treasury officials to look into a “proportional” property tax to see how it would work as an alternative to the existing stamp duty land tax on owner-occupied homes.
More than a quarter of UK adults in long-term relationships (26%) have reported that despite living together, they keep their finances separate from one another.
There has been a rise in both rent and mortgage costs over the last three years, with renters seeing a greater increase in their monthly payments than those with a mortgaged property.
Delayed Start Mortgages
6 Aug 2025
The new Delayed Start Mortgage launched by Skipton Building Society allows first time buyers to postpone the first three mortgage payments. This product has been designed to help soften the blow of moving in costs for first time buyers.
Green Mortgages | Rewards and Benefits
4 Aug 2025
Mortgage lenders are starting to recognise their “Green” responsibilities when it comes to the different products they offer.
A recent study by Boon Brokers where 1,000 people who had used an estate agent over the last year were surveyed, showed that a whopping 52% said they were pressured into using the estate agents’ in-house mortgage broker.
More information
Trusted by
