Tax benefits

Employer: Providing Her Majesty’s Revenue & Customs (HMRC) agrees that the premiums paid are wholly and exclusively for the purposes of the business, the employer is entitled to corporation tax relief on the payments. Furthermore, there are no National Insurance contributions to pay on the policy payments.

Employee: There are no National Insurance contributions to pay on the policy payments and as the payments are not treated as a benefit in kind, they are not subject to income tax. On the death of the insured person, the tax-free lump sum will not form part of the deceased employee’s estate and will not be subject to inheritance tax.