A Relevant Life Policy is a tax-efficient way for a business to provide individual employees with death-in-service benefits. In essence, RLPs are set up under group scheme rules, but, unlike most large employer-sponsored schemes, they are 'non-registered' and consequently the benefits do not form part of an employee's lifetime pension allowance.

 

RLPs attract significant tax savings when compared with individual life assurance paid from salary:

 

• Premiums are paid by the business and are an allowable deduction against Corporation Tax

• There is no liability for employer or employee National Insurance on the premiums

• The premiums are not considered to be a benefit in kind so the employee is not liable for income tax on them

• Life benefits can be paid tax free to the employee's beneficiaries through a discretionary trust

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Relevant Life Plans can be established for employees or directors to benefit their dependents via a discretionary trust. There are, therefore, several types of clients that would benefit from a Relevant Life Plan:

 

High Earners

Highly paid employees who have accrued a large pension fund can be provided with death-in-service benefits that don't contribute to their lifetime allowance.

 

Small Businesses

Small businesses may have insufficient employees to warrant a group death-in-service scheme as most schemes require at least five employees. However, Relevant Life Plans can be set up for each of the employees in a small firm.

 

Individual Requirements

Some employees may need more life assurance than is offered by the business’ main death-in-service scheme. A Relevant Life Plan can be set up alongside the main scheme to achieve this objective.