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Did you know Life Cover is now classed as a business expense?

on-phone-and-laptop

Life Insurance is now tax-free and classified as a business expense.

Offering death in service benefits to you or your employees ensures they don’t have to worry about their loved ones should the unthinkable happen. Whether you’re a company director who wants to offer it to you and your staff, or contractor who wants it for your own family, Life Insurance has always come with hefty tax implications. But that’s no longer the case.

Changes mean big savings.

As a director or a contractor you probably aren’t aware of ‘A Day’ and why would you be. Back in April 2006 there was a big change in legislation (known as ‘A Day’). Though this was over a decade ago many people still aren’t aware of the significant savings involved.

Here’s what ‘A Day’ means for you:

  • Life Insurance premiums are not taxed on the employee as a P11.

  • Premiums can be offset as a business expense.

More affordable for contractors and Directors.

Known as Relevant Life policies, they are much more generous tax-wise. If you are a self-employed contractor or Director, you probably pay for your premiums out of your own pocket. However, you can now put them down as a business expenses, thereby saving money on tax. In the unfortunate event that your loved one has to claim, then the lump sum received is also usually free of income and inheritance tax too (unlike traditional Life Insurance policies).

Better business sense for company directors.

If you’re a company director, the tax savings can be considerable and offer a great deal of flexibility. Not only can they be classed as a business expense, they can also be taken out as a single Relevant Life policy to cover all your employees. This is done in the form of a discretionary trust, with the company paying one premium each month to cover all the relevant families/dependents. The savings for doing it this way can be for significant for your business.

For example, if you currently pay £50pcm, have 25 years remaining on your policy, and are a basic rate taxpayer the following would apply:
  • Your current monthly premiums paid personally by you from your take-home pay are £50.00.
  • With tax at 20% and NI of 12%, to net this amount your gross pay would need to be £73.53
  • Including employers NI at 13.8% the total cost to your company to net this amount is £83.68
  • This amounts to £1,004 annually, and with 25 years remaining on the policy the total is £25,103
  • By having your company take over the payment of the premiums for you, you could reduce your salary by £73.53without it making any difference to your disposable income
  • After 20% corporation tax relief, the cost to the company is only £12,000 instead of £25,103
  • By switching to a Relevant Life Policy, the ONLY change to your circumstances is an extra £13,103 in your company profits
* Assumptions made for simplification of the calculator:
Standard rate taxpayers NI at 12%, higher rate taxpayers NI at 2%, employers NI at 13.8%

 Providing you’re not a sole trader or an equity partner, Relevant Life Plans can offer almost all types of employees the benefits of Life Cover but with significant tax savings.

If you would like to know more about how you can become a Relevant Life Expert partner and accuratly inform your clients please email us: advice@relevantlifeexpert.co.uk or to speak to an adviser please call 01202 700053


Three reasons why Directors love Relevant Life cover

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If you’re a Director, you may already have Life Insurance to look after your loved ones after you’re gone. In return for paying a monthly premium, it pays out a lump sum to help look after them. But many contractors are switching to a product called Relevant Life cover, because it is much more cost-effective. Here’s why.

  1. It’s classed as a business expense.

 

Unlike traditional Life Insurance, which you pay out of your own pocket, Relevant Life cover can be classed as a business expense. That means the monthly costs can be put through your books, making it eligible for tax savings.

 

  1. You can save up to 100% of the cost personally.

No matter what your tax bracket is, you could save 100% on the cost of your life cover by placing the plan on company expenses. Taken over 25 years this adds up to a considerable amount. For instance, if you pay a £50 premium each month, this makes a total of £15,000 over 25 years (average mortgage term). But by switching to a Relevant Life policy, you’d save 100% of this cost, enough for a very nice holiday…

  1. The lump sum isn’t taxed.

The problem with traditional Life Insurance is that when your loved one makes a claim, they may find that the sum paid out isn’t quite as much as they thought. This because it’s subject to inheritance tax. However, providing your Relevant Life policy is sent up correctly by an expert, the benefit paid out won’t be taxed, so they’ll get the full amount.

What to do next?

The benefits of Relevant Life cover are plain to see, but with any cover, factors can vary a great deal depending on who you are and your policy provider. It is important to choose a policy that fits you and the needs of your loved ones, and this is where we can help. We know all there is to know about getting you a policy that fits you down to the ground and saves you money.

If you are an accountant and have clients you think would be interested in Relevant Life why not drop us a line on how you can become a Relevant Life Expert partner.

Use our online calculator to find out how much you could save: http://www.relevantlifeexpert.co.uk/

To speak to and adviser today, please call 01202 700053

 

Send us an email: advice@relevantlifeexpert.co.uk

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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