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A Guide to Trusts and Tax Efficient Life Insurance

relevantlife_icon

When it comes to planning your family’s financial future, it makes good sense to take all steps possible to protect their standard of living. Arranging your life insurance in the right way, to give your loved ones the maximum possible benefit  is an important consideration. One option when taking out life insurance is putting the policy into a trust. And yet according to insurer Aegon, only 6% of life-insurance policies in the UK are set up in this way. 
This is surprising as it can be advantageous and is very simple to do. Many Contractors are now opting for a tax efficient Relevant Life Plan as all policies are written into trust from the outset (in order to meet HMRC qualification for tax exemption) and in doing so place the cost of life insurance on company expenses without alteration to their P11D status (they also benefit from 20% corporation tax relief on the premium too).
What is a trust?
A trust allows you to set aside an asset to benefit a specified person or people (the beneficiaries). The asset is managed by a trustee or trustees until such time as the beneficiary is intended to benefit. So, for example, your spouse may look after property on behalf of your children until they reach a responsible age. Life insurance policies are such an asset, and putting a policy into a trust can affect what happens to the payout from a policy in the event of your death.
Note: In industry jargon, putting a life insurance policy into a trust is known as “writing life insurance in trust” or a policy is “written in trust”. With Relevant Life Plans, you the insured would be a trustee along with your business (thus meeting HMRC qualification for tax exemption as the plan is owned by you and the business). Your spouse or any other nominated person could be a beneficiary. Should you move between business or start a new company you can take your Relevant Plan with you and update the trust as you go.
Trusts can help sidestep inheritance tax
Under normal circumstances, the payout from a life insurance policy will form part of your legal estate, and may therefore be subject to inheritance tax.
By writing a life insurance policy in trust, the proceeds from the policy can be paid directly to the beneficiaries rather than to your legal estate, and will therefore not be taken into account when inheritance tax is calculated. This means the value of your estate may not move above the threshold, depending on your circumstances. Should you opt for a Relevant Life plan not only will the benefit be paid tax-free, the payout won’t count towards your lifetime contribution towards pensions allowance (therefore not pushing you into a taxable banding here either).
You don’t need probate to be granted in order for the policy to pay out
Writing a policy in trust also means the payment to your beneficiaries will probably be quicker, as the money will not go through probate. This is a legal process which confirms an executor’s authority to deal with your possessions. So, for example, if you leave everything to your spouse in your will, then your spouse will have to get probate granted before they can distribute your money, property and so on.
This process can take a long time, even when there is a will. In cases of intestacy (where there is no will), it can drag on for a lot longer. However, if the life insurance policy is put into trust, then it can pay out before probate is granted, as the insurance provider will just require a death certificate before paying out.
You could get greater control over your policy
Writing life insurance in trust allows you to specify how you want the proceeds to be paid out. For example, trustees can be appointed to oversee money for the benefit of children under 18. In addition, setting up a trust means that the payout will go to the people you intend it to.
Does it cost extra?
No, with a Relevant Life plan a trust is required to be implemented from the outset, this option is free when taking out the policy. Some existing life policies can also be transferred into a trust or amalgamated into a new tax efficient policy through your business with a Relevant Life Plan.
The basics of Relevant Life and trusts
At Relevant Life Expert, life insurance really isn’t as expensive as you might think. The benefits are clear and simple:
  • Place 100% of the cost of your life cover on company expenses (even if you have existing plans in place to protect your mortgage or income – swap and save)
  • Benefit from 20% corporation tax relief on the cost of the premium
  • No alteration to your P11D status
  • The policy is written into trust from outset
  • Life cover and terminal illness benefit included
  • The policy can be moved between businesses or converted into a policy paid from your personal account if circumstances change
  • The average we save our clients is £15,000 over the lifetime of their plan simply by swapping to a Relevant Life Plan
So, whether you are already paying for life insurance out of taxed income or you have not yet got around to putting vital life insurance in place or into trust, a Relevant Life policy could be the most tax-efficient solution. 
For more information, contact Relevant Life Expert on 01202 700053 or request your free impartial quote here.
You’ll also be able to see how much you can save on the link above with our Relevant Life Calculator.
“AS A BUSY PROFESSIONAL, IT IS VITAL THAT I RECEIVE TIMELY EXPERT ADVICE. YOU AND YOUR TEAM HAVE CERTAINLY DELIVERED THAT.” JAMIE WOLLEN 

Accountants are the key to small business success

Steve J Bicknell

Stick Figure Series Blue

Last week the ICAS reported based on IFAC research..

SMEs were shown to traditionally rely on accountants as a main source of business advice. One study identified an 8.1% average increase in sales growth and a 29% decrease in likelihood of failure for businesses using an external accountant.

Also last week smallbusiness reported that 1.3 million britons want to start their own business.

So when would a business need to contact an external accountant?

Picture 1

  • Business Plans
  • Budgeting and Forecasting
  • Cash Flow Management
  • Buy or Rent decisions
  • Capital Investment Appraisal
  • Accounting Procedures and Systems
  • Business Strategy
  • Busines Funding and Investment
  • KPI’s

For start ups its particularly important to ask your accountant to help with:

  • Choosing the right business structure for your business – most businesses start out as sole traders but once they start making profits convert to limited companies, this is because sole traders pay more tax than company structures
  • Choosing the…

View original post 43 more words

Life Insurance isn’t as expensive as you might think – especially if your company pays for it with Relevant Life Expert.

Coat and bag hanging on a hook
The perception of how much life insurance costs is nearly 400% above the actual cost, according to a survey from Critical Research.
From a poll of 1,011 people, 48% cited affordability as the main reason for not obtaining life insurance. On average, those surveyed thought £100,000 of life cover would cost £50.98 per month, and 47% said they had no idea how much life insurance really costs… Life insurance can start from as little as £6 per month and is an important consideration if you are self-employed and the main breadwinner.
This research highlights that people are not protecting themselves with life cover because they’re not aware of the actual costs involved. As a result, it is vital that this misconception is addressed in order to inform people that there is such a thing as cost-effective life insurance. This is where Relevant Life Expert steps in.
We made it our mission to deliver more accessible and affordable life insurance for both Contractors and Directors of small companies. With Relevant Life Expert, life insurance really isn’t as expensive as you might think. The benefits are clear and simple:
·  Place 100% of the cost of your life cover on company expenses (even if you have existing plans in place to protect your mortgage or income – swap and save)
·  Benefit from 20% corporation tax relief on the cost of the premium
·  No alteration to your P11D status
·  The policy is written into trust from outset
·  Life cover and terminal illness benefit included
·  The policy can be moved between businesses or converted into a policy paid from your personal account if circumstances change
·  The average we save our clients is £15,000 over the lifetime of their plan simply by swapping to a Relevant Life Plan 

So, whether you are already paying for life insurance out of taxed income or you have not yet got around to putting vital life insurance in place, a Relevant Life policy could be the most tax-efficient solution. 

For more information, contact Relevant Life Expert on 01202 700053 or request your free impartial quote herehttp://rlp.relevantlifeexpert.co.uk/relevant-life-expert/

You’ll also be able to see how much you can save on the link above with our Relevant Life Calculator.

“LIFE COVER WAS NOT SOMETHING I HAVE EVER THOUGHT ABOUT UNTIL I HAD CHILDREN. AS THE MAIN EARNER IN OUR FAMILY, I WAS CONSCIOUS THAT IF SOMETHING SHOULD HAPPEN TO ME, MY FAMILY WOULD BE LEFT IN A TRICKY FINANCIAL POSITION. WHEN I DISCOVERED I COULD ACCESS LIFE COVER IN SUCH A TAX-EFFICIENT WAY THROUGH RELEVANT LIFE EXPERT, I WAS SOLD!”

                       ABIGAIL WHITE 

The plastic £5 is coming in September – what do you think? good or bad?

Steve J Bicknell

£5

The New Fiver was unveiled at Blenheim Palace on 2 June and will be shown to the public at a number of events across the UK this summer.

The New Fiver will enter circulation on 13 September. It will then take a few weeks for the notes to spread across the country to shops, businesses and banks.

In May 2017 paper £5 notes will cease to be legal tender and will no longer be accepted by shops and banks.

Other notes and coins

The three Scottish banks are also printing their next £5 and £10 notes on polymer. Clydesdale Bank will be issuing a polymer £5 on 15 September, the Bank of Scotland on 4 October and RBS in November 2016. The Royal Mint will be issuing a new £1 coin in March 2017.

Future banknotes

The New Fiver is the first of the Bank of England’s new series of…

View original post 170 more words

Are you PSC ready?

Steve J Bicknell

I want you

From the 30th June 2016 all companies will be required to prepare a PSC Register.

You need to start keeping a register of your people with significant control (PSC).

A PSC is someone in your company who:

  • owns more than 25% of the company’s shares
  • holds more than 25% of the company’s voting rights
  • holds the right to appoint or remove the majority of directors
  • has the right to, or actually exercises significant influence or control
  • holds the right to exercise or actually exercises significant control over a trust or company that meets any of the other 4 conditions.

You’ll need to keep your PSC as part of your company register, as these need to be available for inspection.

PSC BBA v2

Failure to comply will result in fines and up to 2 years in prison!

steve@bicknells.net

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HMRC have raised over £500m in unpaid tax and penalties!

Steve J Bicknell

HMRC Undeclared 8169099509_3860d7f26c

Taskforces are specialist teams that undertake intensive bursts of activity in specific high risk trade sectors and locations in the UK. The teams will visit traders to examine their records and carry out other investigations.

HM Revenue and Customs (HMRC) taskforces have recovered more than £500 million since they were launched five years ago.

The targeted bursts of enforcement activity have brought in progressively higher amounts every year, and the total now stands at more than £540 million. This includes nearly £250 million raised in 2015-16 alone, almost double the previous year’s yield.

Since 2011, HMRC has launched more than 140 taskforces targeting sectors that are at the highest risk of tax fraud including the retail sector, the tobacco industry and the adult entertainment industry.

Jennie Granger, Director-General for Enforcement and Compliance at HMRC, said:

The message is clear: if you try to cheat on your tax…

View original post 365 more words

www.stevejbicknell.com blog smashes through 300,000 hits!

Steve J Bicknell

Blog 300000

http://www.stevejbicknell.com has now had over 300,000 views, nearly 200,000 unique visitors and on Sunday reached a new daily views high of 1,396 views in a single day!

I think that’s pretty impressive for a Tax and Accounting Blog!

Looking at phone

We have over 7,000 followers and our most popular day is Tuesday and the best time is 1pm, which is interesting as last year it was Wednesday at 10am.

Our top 3 blogs of all time are:

  1. https://stevejbicknell.com/2012/04/07/a-quick-guide-to-vat-on-sandwiches-takeaway-food-cakes-and-pasties/
  2. https://stevejbicknell.com/2013/01/31/self-assessment-payment-shipley-or-cumbernauld/
  3. https://stevejbicknell.com/2012/12/15/when-should-you-charge-vat-on-inter-company-recharges/

January 2016 has had the highest monthly number of hits at 12,000

So why do people read my blog?

  1. Useful Content – I learned a long time ago that if you want followers and readers you have to write about things that will interest as wider audience as possible. My blog is about Accounting and Tax, which you might think is boring but it does affect everyone, we all pay tax! and…

View original post 207 more words

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