Employer provided life insurance policies

payrollpropayrollpro Trusted RegularHampshire/SurreyRegistered, Working Together with HMRC Posts: 418
in Tax
I thought I knew the answer to this but for 2018/19 and 2019/20 the HMRC guidance is absolutely no help at all and I dont want to work with what I knew to be the previous ruling. Employer pays for a life insurance policy, as far as I am aware the contract is between the company and the provider, which makes a payment to a named beneficiary in the even of the employees death. Firstly, am I right that the premiums are reportable on P11D, even if it is for a close company and secondly, any payout is dealt with under different provisions depending on the amount paid? My belief is that the company can pay, or arrange to pay up to four times the annual salary at the date of death and there is no income tax on the payment, either on the cost of provision or the payment in the hands of the beneficiary.

Comments

  • RyanMIPRyanMIP LincolnshireRegistered Posts: 55
    On the P11D point: s.307.

    Generally no tax on payout, but if it isn’t a relevant life policy it can utilise the individual’s lifetime allowance.
  • payrollpropayrollpro Trusted Regular Hampshire/SurreyRegistered, Working Together with HMRC Posts: 418
    I have always held the view that its ignored but as soon as i saw that the clients previous adviser has been declaring the insurance premiums, i had a small crisis of confidence. Of course i may not have been told the full story - so i need to dig a bit more. Thanks for your views.
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