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
Almost one in five equity release mortgages are now taken out to provide financial support to family.
Buyers purchasing properties sooner
2 days ago
According to industry data, the expected wait for those looking to buy a property has dropped from just over 11 months to less than six months.
It is common for your first mortgage payment to be higher than your subsequent monthly payments for two reasons.
What to do just before you get your keys
7 days ago
Firstly, a big congratulations, you’ve now exchanged contracts! After weeks and months of waiting, you are about to move in. What should you do first?
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
29 Aug 2025
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.
More information
Trusted by
