Date posted: 3rd Jul 2026
Relevant life insurance is a tax-efficient way for employers to provide life cover for directors and employees.
It is especially useful for owner-managed businesses that want to offer protection while keeping costs tax efficient.
Premiums are usually treated as a business expense, so the company may be able to claim corporation tax relief. In most cases, there is also no employer or employee National Insurance on the premiums, and the employee or director is not normally taxed as a benefit in kind.
The policy is usually written in trust, which can help keep the payout outside the insured person’s estate for Inheritance Tax purposes. The benefit is also generally paid free of Income Tax and Capital Gains Tax.
This makes relevant life insurance a practical option for company directors and key staff in smaller businesses. It can provide valuable cover without the cost and complexity of a full group life scheme.
As with any tax planning arrangement, the policy must be structured correctly to achieve the intended tax treatment.
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