We want to ensure that you fully understand how our investment service is provided to you and the terms and conditions of the service. Please ensure that you review the documents below before you take out an investment with us. Thank you.

Key Facts about our Services and Costs

Terms of Business

I have read and understand the terms and conditions

Saving Tax by Managing Life Assurance Efficiently

This case study demonstrates how significant tax and National Insurance savings can be made by managing your life assurance efficiently.

Life Assurance

The problem: Paying for life assurance after-tax income

The benefit:  Life assurance premiums become a business expense

Suitable for: Directors and employees

Has your life assurance cover been arranged in the most efficient manner? For employees or directors of companies, it can be more beneficial for the company to fund your life assurance policy rather than you paying for it out of your taxed income.

John was a shareholding director of his own limited company who met an adviser from Goldstone Wealth to review his life cover. At that time he paid £1,000 per annum for his life assurance from his business account. The purpose of this was to provide a lump sum to help his wife and 2 young children should he die in service.

What John had not considered was as a 40% income tax payer he paid plus an additional 2% National Insurance (NI) on the higher part of his salary. In addition, his limited company paid employers’ NI at the rate of 13.8%. From the £1,000 annual premium paid John was paying employee NI of £34.38, employee tax of £689.66, employer NI of £237.93 despite offsetting employer tax of £392.41. In essence the total cost of the £1,000 annual premium was £1,569.66 to John.

When the Goldstone adviser looked at John’s circumstances, it was established that it was possible for his business to apply for a special type of death-in-service arrangement providing John with the same level of benefit for the same annual premium of £1,000. But with no income tax or National Insurance to pay. Furthermore, the premiums were allowable deductions against Corporation Tax, saving a further £200 per annum, resulting in a net cost of £800.

This represents an annual saving of £769.66 or 49% of the original gross cost.

Contact Goldstone Wealth today to ensure that your business has the best suitable death in service plans in place.

No comments

You must be logged in to post a comment.