Relevant Life Insurance for Limited Company Directors
As a director of your own limited company, your company can pay for your life insurance — with potential tax advantages that a personal policy cannot match.
For limited company directors, a Relevant Life Plan is widely regarded as one of the most tax-efficient ways to arrange life insurance. Your company pays the premiums rather than you paying from personal income that has already been taxed. The tax treatment may be significantly more favourable, subject to HMRC rules and your company's circumstances — particularly for director-shareholders who take a combination of salary and dividends.
What is Relevant Life Insurance for Limited Company Directors?
A Relevant Life Plan is a single-life, term assurance policy taken out by your limited company on your life as a director. The policy is written in a discretionary trust, so the payout goes directly to your family or dependants and falls outside your estate for inheritance tax purposes. It provides the same type of cover as a personal life insurance policy — a lump sum paid on death within the policy term — but the structure and payment method are fundamentally different, and potentially much more tax-efficient.
Who is it suitable for?
Key Benefits
Tax Considerations
For limited company directors, the potential tax advantages of a Relevant Life Plan over a personal policy can be significant. Premiums paid by your company may qualify for corporation tax relief, subject to HMRC rules and your company's circumstances. You pay no income tax or National Insurance on the premiums as a benefit-in-kind. Compare this to a personal policy, where premiums are paid from income that has already been subject to income tax, National Insurance, and potentially dividend tax. The overall saving depends on your tax position and individual circumstances. We recommend seeking independent tax advice.
Tax treatment depends on individual circumstances and may be subject to change. We recommend seeking independent tax advice.
Example Scenarios
Sole director-shareholder
A sole director taking a low salary and higher dividends arranges a Relevant Life Plan through their company. The company pays the premiums, which may qualify for corporation tax relief. The director pays no income tax or NI on the benefit, and the payout falls outside their estate — subject to HMRC rules.
Director with existing personal policy
A director currently paying £150/month for personal life insurance from post-tax income reviews their options. By switching to a Relevant Life Plan, their company pays the premiums instead — potentially reducing the effective cost significantly, subject to their tax position.
Director approaching retirement
A director in their 50s wants life cover to run until they plan to retire and wind down the company. A Relevant Life Plan provides term cover to their chosen retirement date, paid by the company.
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