Relevant Life Plan Information

The following provides information on a Relevant Life Plan.

The Financial Conduct Authority does not regulate tax planning and trusts.  Tax treatment varies according to individual circumstances and is subject to change. 

The Financial Conduct Authority do not regulate employee benefits and trusts.

If you run a small business, an excellent way to recruit and retain staff is to offer good employee benefits such as a Relevant Life Plan. 

WPP Financial Services, Rochester, Medway, Kent, could help with this

For more information, see our partner site,

A Relevant Life Plan is a death-in-service benefit taken out by a company on behalf of an employee.

This type of policy pays a lump sum if the employee dies during the term of their employment. More often than not, a Relevant Life Plan also provides a payout if the employee is diagnosed with a terminal illness. It is important to note, however, that terminal illness claims will not be paid in the last 12 months of the policy.

What are the main benefits?

For the employer

The premiums may be treated as an allowable expense in calculating your tax liability.  And, unlike a registered group scheme, these policies have no effect on the amount of money you can contribute to or accumulate in your pension scheme.

For the Employee

Relevant Life Plan policies are often tax-efficient for high earners. This is because the premiums are paid by the company, meaning they are not usually liable to employee income tax.  Premiums/benefits don’t count towards the employee’s annual or lifetime allowances for pension purposes and the plan isn’t classed as a registered pension plan meaning membership won’t cause loss of certain lifetime allowance protections.

In addition, the benefits are, in most instances, paid free of inheritance tax – provided they are paid through a discretionary trust.

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Who might Relevant Life Plans be suitable for?

– Small businesses that have a small number of employees and do not qualify for group life schemes

– High-earning employees or directors who have substantial pension fund savings. A Relevant Life Plan means their death-in-service benefits do not impact their pension allowance

– Members of group life schemes who want to top up their benefits beyond the scheme rules

There are some individuals for whom Relevant Life Plans are usually not suitable. They include the self-employed, equity partners or members of limited liability partnerships.


Are there limits to the Relevant Life Plan cover?

In order for the employee to qualify for the tax concessions, certain rules must be satisfied in the Relevant Life Cover:

– the cover must be paid in a single lump sum before the age of 75

– only death benefits can be provided

– benefits should be paid through a discretionary trust

– beneficiaries should be restricted to the employee’s family members and dependants

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HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

Other Information that could help Protect your Business:

Key Person Insurance | Partnership Protection  | Shareholder Protection

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