£4m Relevant Life Cover for Entertainment Industry Directors – Correctly Structured for Full Tax Efficiency
What was the situation?
They came to LDN Finance to review their mortgage arrangements, and as part of that process, Rob Fox, Protection Director, reviewed their existing protection in full.
What was the issue?
Life cover was already in place, arranged on a personal basis and funded by the company.
The premiums carried a benefit in kind charge and did not qualify as a deductible business expense, generating an income tax and National Insurance liability for both directors personally. It is a common and costly structural error, and that many directors are entirely unaware of.
What was the process?
The Relevant Life plans were structured to qualify in full for corporation tax relief, removing the benefit in kind charge entirely. The sum assured was set at £2,000,000 per director, set deliberately above the outstanding mortgage balance to ensure the cover would remain appropriate as their financial position developed. Rob also addressed portability from the outset, ensuring both directors retained the right to transfer their plans into personal ownership should their circumstances change in the future.
What was the solution?
A protection review conducted as part of a mortgage remortgage delivered a material saving and a significantly more efficient arrangement. At LDN Finance, advice extends across mortgage and protection in equal measure, ensuring that every aspect of a client’s financial arrangements is structured to work as efficiently as it should.
For specialist advice on relevant life insurance for directors, visit this page.
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Relevant life cover is being increasingly used by small businesses to attract and retain highly experienced employees as part of an attractive benefits package. The policy pays out a tax efficient lump sum amount in the event of the death or diagnosis of a terminal illness of the employee insured. This sum goes directly to your employee’s family or financial dependants.
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