How to save tax on your contractor life insurance
Did you know that as a contractor you can fund your life insurance through your business with no income tax or benefit in kind considerations? This means that you are able to protect your loved ones without having to pay tax on this essential protection for your family. Life insurance offers peace of mind that your dependents are protected and once it is in place you will not need to think about it again.
Contrary to the popular belief that these insurances are an unnecessary drain on your income, life cover can in fact help you reduce your tax bill, so it’s a win-win! Your family get the protection of a lump sum payment if the worst should happen to you while you benefit from upfront tax savings today.
Relevant Life at a glance
The specialist Independent Financial Advisers (IFAs) at ContractorMoney identify the following key benefits of ‘Relevant Life,’ the tax-efficient, company-funded life cover:
- Your dependents will be left financially secure with a lump sum amount that could be used to pay off a mortgage or any other debts
- Save personal income tax and NI on drawing the salary or dividends to cover life insurance premiums
- You can reduce your corporation tax bill as life insurance premiums are classed as a legitimate business expense
- There are no benefit in kind considerations
- Your lifetime or annual pension allowance will not be affected. This means that if you have established a significantly large pension pot you can still benefit from tax relief on pension contributions
- The policy is held in trust so that any payment goes directly to your dependents, and they will not be liable to pay tax on the lump sum unlike the ‘Keyman’ policies of old
- Your policy can be ‘inflation proofed’ so the lump sum payment will be worth what you expected whenever your family needs to make a claim
- Our IFAs will be able to tailor a suitable insurance policy to suit your specific needs and will handle the whole application process, also assisting your family to make a claim should the worst happen
Don’t delay, start saving tax today!
Relevant life cover can help you reduce your corporation tax from day one of your policy starting and unlike standard life cover policies found on price comparison sites, your Relevant Life policy can be tailored to your unique needs.
To find out more about how Relevant Life Cover can be of benefit to you, call 03450 628888 or complete the contact form and a Protection Adviser at ContractorMoney, the author of this article, will be in touch.