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Life insurance cover for directors of limited companies
As a company director you may be eligible to take out life insurance in a more tax-efficient and therefore cost-effective manner than your existing life insurance arrangements.
As a company director, if you have existing life insurance you will likely be paying for it in one of two ways - either directly out of your post-tax income, or alternatively out of the company account. Either way, you will be subject to taxation, whether that is on the earned income from which you pay the premiums, or due to a P11D benefit in kind liability arising.
"It is now possible, provided you fulfil certain criteria, to take out a company director life insurance plan that is paid for by your company, does not incur any P11D liability and would likely be classed as an allowable expense against the companies Corporation Tax liability."
The net cost to the individual company director using this arrangement is significantly lower than when paying for a standard personal life insurance policy via the company account.
This difference is greater still when a company director life insurance premium has been for out of post-taxed income and even more so for higher-rate tax payers.
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"As the director of a limited company and a higher-rate tax payer, I found I was eligible for significant savings in the premiums being paid for my director's life insurance"
"Specialist advice should be taken before any decision is made about whether a limited company's director's life insurance should paid by the business"