You might be wrong!
Do you think you are already paying your life insurance through your business? You might be wrong!
Common misconception
One of the most common responses we receive when we ask people whether they are paying their life insurance as a business expense is, yes, my account sorts this for me.
However, just because you pay the premium from your business account doesn’t mean it’s tax-deductible. In many cases, the accountant adds this to your director’s loan account, and you then pay corporation and dividend tax at the end of the year in the same way.
The only way to make these premiums tax-deductible is with a relevant life policy. It is the only life policy that HMRC approves as a business expense with zero benefits in kind tax.
Don't jump to conclusions
So, before you jump to the conclusion that you are already claiming your premiums as a business expense, it might be worth checking with your accountant again. I would advise you to be specific with your question;
‘Are my life insurance premiums qualifying as a business expense, or are the premiums added to my directors’ loan account and chargeable to corporation tax and dividend tax before they are paid’?
Another way of checking this is, do you have a personal life policy in your name and not the name of the company? If so, it is not possible to claim these premiums as a business expense, so again, worth checking with your accountant.
If you are paying a personal policy through the business, you are missing out on a considerable tax saving. During the term of the policy of our other clients saved £27,000 on their premiums, so although they may seem like small monthly savings, they mount up very quickly.
Double check
So, for the sake of a quick email to your accountant, double-check you are managing this in the most tax-efficient way.
For further information, feel free to reach out to us. We are also happy to speak to your accountant if this wud be helpful.