• Relevant Life Plans (RLP’s) are usually classed as a legitimate business expense which therefore reduces net profits and also your final corporation tax bill.
• There will be no employer National Insurance contributions payable on the premiums of a Relevant Life Plan policy.

• If a director or employee pays for a life insurance policy personally, then all premiums are typically paid with earned money after income tax and national insurance contributions are paid on salary. Therefore, tax relief on relevant life plan premiums through a limited company can be as high as 62%!
• There will be no employee National Insurance contributions payable on the premiums of a Relevant Life Plan policy.
• The policy premiums won’t be taxed as a benefit in kind.
• When a policy pays out the benefits will not count towards annual or lifetime pension allowances.

From an employer’s perspective Relevant Life Plan insurance can also be an extremely valuable and cost efficient benefit to offer employees either on its own or as part of a wider employee benefits strategy to help attract and retain top employees.

Most small and medium sized businesses rely on at least one key director or employee who is the key to the success of the business and will typically have a highly desirable skill set for the business. The loss of a key person can have a significant impact on a business including a reduction in sales and profits and in some cases even closure of the business itself. When there is such a heavy reliance on individuals to the continued success of the business it is essential the business insures against the loss of that key person.

Also known as Key Man insurance, Key Person insurance allows a company to protect itself from financial loss, loss of earnings and the cost of replacing the individual if a key person dies or is diagnosed with a critical illness or terminal illness.

This policy is typically owned and paid by the employer and therefore any benefits are normally payable to the employer.

If a business owner or shareholder dies without shareholder protection it is likely their shares within the business will be passed to their family. This could result in the surviving business owners inheriting new business shareholders who may have a controlling influence over the business or paying dividends to a shareholder who doesn’t contribute to the business.

Shareholder protection can be used to provide certainty and a suitable strategy for the remaining shareholders to purchase shares from the critically ill shareholder or the deceased shareholder’s family in the event of death. A shareholder protection plan can ensure appropriate funds are available in the event of a business owner dying or becoming critically ill along with an appropriate ‘business’ will such as a cross option agreement to provide certainty of how the shares are distributed and purchased in the event of death or critical illness. However, there are a number of different shareholder protection strategies depending on the circumstances of the business and the shareholders. These arrangements allow shareholders in small and medium sized businesses to significantly reduce the risk of ownership issues arising in the future.

From small two person companies to larger international corporations, shareholder protection is an essential strategy that all businesses should incorporate into their long term business plans to provide certainty around the longevity of the business and peace of mind for fellow shareholder and family members.

Please call us now on 01908 920043 for a no obligation discussion with an adviser about your business protection needs or send an enquiry through our website contact us page.