These plans are covered by the same legislation that deals with group schemes. But unlike most schemes provided by large employers, they don’t fall under pensions legislation because they’re ‘non-registered’.
Some companies are big enough to run a registered group scheme to pay for life cover. This is tax-efficient because the payments they make aren’t treated as a P11D benefit, and they qualify for corporation tax relief. What’s more, the benefits are payable tax-free to dependants.
But directors of smaller companies have been missing out because it hasn’t been possible to have a one-member scheme, and group risk providers don’t usually cater for fewer than five members. So these directors pay for personal plans from their income after tax, or from the company account. If they pay from the company account, the payments are treated as income and taxed accordingly.
Relevant life plans are ideal for:
Note: Relevant life plans can sit alongside the group scheme as long as the employer is willing to fund it or accept a salary sacrifice.
The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Also it may not reflect the options available under a specific product which may not be as wide as legislations and regulations allow.
All references to taxation are based on our understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances of the investor.