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What is relevant life insurance?

Simply put – place personal life cover on company expenses.
If you currently pay for your life cover from your own bank account you will be paying out of post-tax income, and if you pay for it from your business account you will probably be taxed on the payment as if it were income. 
Relevant Life Plan offers some very special advantages to directors and employees of small businesses, most notably tax efficiency. While the cover is personal to you and your employees, the policy counts as a business expense so it’s tax deductible. It’s also a cost-effective way to offer life cover to your employees if your business is not eligible for a group life scheme.
 Relevant life policy tax benefits are available to both the employers and employees:
    • You will save Tax by having the company pay the premium
    • The premium will not be included as a P11D benefit
    • Premiums are not subject to National Insurance payments for employer or employee
    • Your company can claim Corporation Tax Relief on the premiums
    • Benefits are payable tax free
    • Benefits do not count towards your lifetime allowance for pension purposes
The Opportunity
The Relevant Life Expert (a trading style of Broadbench Ltd, authorised by the FCA) can assign your own ‘Relevant Life’ page to market to your clients/members/affiliates and for good reason. It offers great tax savings to your clients/referrals, and can generate income for you.
      • You will be assigned your own personalised website link that tracks any client referrals for Relevant Life – (you’ll get your own URL)
      • Market/educate/discuss with your clients/members/affiliates and recommend the product along with your personal website link.
      • Those interested will then visit the site, watch the video, use the calculator and quickly see the great benefits that Relevant Life offers.
      • Referrals can call in or email for a quote or advice. A trained qualified adviser will then aim to book an appointment, complete a recommendation and ultimately make a sale. We’ll also try our best to recommend Health Care/Key Persons Cover and Income Protection, as you’ll receive referral fees on those sales too.
      • For each referral you will receive 10% of commissions we receive paid monthly in arrears.  If you want to sign up other affiliates to this opportunity (with their own client bank) you’ll receive 5% of the value of any referrals they generate (above and beyond their 10%).
      • You’ll benefit from a partner login to your own portal to see the value and stage of the campaign for each client.
      • You’ll be assigned an account manager, product literature, and marketing pack (complete with emails and a guide) so that you can start creating your own referrals with minimal effort.
      • What can you expect in referral fees? Our newest introducer referred eight clients last month and has generated £2500 from a small campaign on LinkedIn. 
 The Next steps:
      1. Contact Tom Hitchcock (Director at Broadbench) to discuss the opportunity on 01202 700053 or email
      2. We can then setup the website and marketing campaign
      3. Get referring
In summary, Relevant Life offers a huge opportunity to offer a simple, tax efficient life insurance product that provides real value to Directors and staff of Limited Companies. The benefits of cost saving, tax efficiency and writing the policy proceeds into trust really make this a compelling proposition.
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How do you handle Input VAT on Insurance Claims?

insurance design

This often causes confusion, firstly because many people wrongly assume that IPT (Insurance Premium Tax) is VAT, it isn’t! and then when they make a claim they may get a VAT only invoice.

HMRC VIT13500 has the answer…

Insurers cannot recover any VAT incurred in obtaining replacement goods or having repairs carried out for a policy holder. The supply of goods (or services in the case of repairs) is considered to be made to the policy holder. This is so even when payment is made directly to the supplier by the insurer.

Subject to the normal rules a VAT registered policy holder may treat any VAT incurred on the supply as input tax. The insurer will normally pay the policy holder compensation exclusive of VAT. The policy holder will pay the supplier the tax and recover it as input tax.

If an insurance claim is for loss or damage at a domestic property you should make sure that any VAT claimed as input tax relates only to goods used for a business purpose.

Insurance and reinsurance is exempt from VAT under article 135 of the Sixth VAT Directive.

This also explains why an insurer may ask a contractor engaged in repair work not to invoice them VAT, its simply that they want the VAT only element to be invoiced to the insured.

How do you prove ‘No Private Use’ of a company car?

Blue White Red Cars

I spotted this case on the HMRC website the other day…

Elm Milk Ltd 2006 STC 792

A business bought a car for its managing director. It recorded a resolution that the car was for business use only. The managing director had another car that was used for private journeys.

The Court held that there was no reason why a car could not be made unavailable for private use by suitable contractual restraints, and that a company could enter into a binding employment contract with its sole director. Therefore, on the facts of the case, the car was available for business use only and input tax could be reclaimed.

The court held that HMRC had given too much weight to the physical constraints and insurance and should have focused on contractual constraints, the employment contract and board minutes.

The following case is also very interesting…

The ‘Shaw’ case

In the Shaw case the taxpayer bought two BMW X5 vehicles together, one for use in his farm business, the other for use privately. Mr Shaw also owned two other cars privately as well. HMRC [again] argued the case based on the social and domestic cover on the insurance policy, but Mr Shaw rebutted this by showing how the insurance policy for his combine harvester had ‘social, domestic and pleasure’ cover too! He added that the premiums for both the X5s and the harvester were lower as a result.

If there is No Private Use then there is no benefit in kind and no fuel scale charges.

So what should you do to prove there is no private use:

  1. Keep the car on the company’s business premises
  2. Keep the keys at the company’s business premises
  3. Prepare a Board Minute
  4. Makesure your contract of employment bans private use
  5. Keep a mileage log
  6. Insure the car principally for business use

Unlike Pool Cars you don’t have to prove it was available to other employees

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