Life Insurance, BIK
noodles
Registered Posts: 308 Dedicated contributor ๐ฆ
Okay, if a life insurance policy in the name of the directors and directors benefit (husband wife) is paid via expense claims from company bank account, how would you treat this in a ltd company. Would you put it as allowable and BIK, dir loan etc etc
comments appreciated.
Thank you
comments appreciated.
Thank you
0
Comments
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Debit directors loan account0
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If the company bears an expense, a BIK will occur.
It's probably far more tax efficient to do as groundy says and debit DLA, thus they bear the expense personally.0 -
Who will benefit in the even of payout? company or estate of the director?0
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Where I work we all have a life insurance cover of 4 times salary. But we don't pay a BIK, the auditer have a thorough look into this, and came back leaving it the way it is...
It was seen as part of our employment package.0 -
If the company is the beneficiary, then there is no BIK AFAIK.
Note: if the company claims tax relief on insurance premiums (of which it is the beneficiary), any insurance payout is taxable. I have a client who opts not to claim tax relief on the premiums to keep any payout tax free.0 -
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Sometimes the company is the beneficiary and then the payout to the employee is via payroll and therefore taxed.
Death in service is not a BIK but other types of insurance may be, the HMRC website is particularly remiss when it comes to BIK insurance as I found out recently!!0 -
it is the directors who benefit and not linked to the company at all. they claimed it each month through their expense claims so the company has therefore paid. I read on the web yesterday that it does not matter if you put it through the company and reduce corp tax and do a BIK or put to dir loan. should the company have reduced corp tax if it is nothing to do with the company ........0
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I would either put it through dir loan and no deduction against ct or it is a BIK and part of employment package and therefore allowable against ct, can you put a link to what you have read because I'm not sure what you mean?
Obviously things could get difficult if a BIK wasn't declared on the P11d and there's not enough in the directors loan!0 -
it would take me ages to re find the link, I searched through hundreds and they were all very vague and differing opinions. I have already put this in as a company expense and through the P11D but now I am wondering if I have done the correct thing.0
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I don't think you have done anything wrong, to be absolutely sure it could be in their employment contract as part of their package - assuming they even have one!
I have a company that I treat in exactly the same way that you have.0 -
If the company is the beneficiary, then there is no BIK AFAIK.
Note: if the company claims tax relief on insurance premiums (of which it is the beneficiary), any insurance payout is taxable. I have a client who opts not to claim tax relief on the premiums to keep any payout tax free.Bluewednesday wrote: ยปSometimes the company is the beneficiary and then the payout to the employee is via payroll and therefore taxed.
Death in service is not a BIK but other types of insurance may be, the HMRC website is particularly remiss when it comes to BIK insurance as I found out recently!!
Thanks, that makes more sense now. So death in service is never BIK? Only the additional health cover.0 -
Sounds badly set up to me.
If it is the individual's own policy that they are expensing into the company then that may even be a payroll issue rather than a BIK.
I notice that the insurance companies have recently been flogging a new type of life insurance that is allowable for the company and not a BIK for the employee. This has only been available quite recently though.0
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