Is Life Insurance a P11D benefit?

chillertwist

Hi all

It was always my understanding that if an employer is the beneficiary of a life insurance policy then no P11D benefit will arise. Likewise, f the employee is the benificiary then it's a taxable benefit which should be reported on form P11D.
I've just found the following on Tolley's..........

Although not strictly health insurance, it is worth mentioning the tax rules on the provision of life insurance by the employer. As long as the employer arranges the life insurance and pays the insurance provider direct, the provision of life insurance is not a taxable benefit on the employee.
ITEPA 2003, s 307

Does this mean that the beneficiary of the policy doesn't affect the treatment either way and life insurance is always a non taxable benefit?? I'm very confused!

Regards

missindecisive

mr husband has life insurance through work, they pay it for him there is no monthly payment. H e doesn't even get a form p11d issued to him, so I would assume its a non taxable benefit.

p00hsticks

missindecisive wrote: »

mr husband has life insurance through work, they pay it for him there is no monthly payment. H e doesn't even get a form p11d issued to him, so I would assume its a non taxable benefit.

Athoguh it may be that his company operates a 'salary sacrifice' scheme (in which case he wouldn't get a P11d)

TadleyBaggie

I've had company provided life insurance schemes for decades, I've never ever seen an entry on a P11D ever.

jimmo

chillertwist wrote: »

Hi all

It was always my understanding that if an employer is the beneficiary of a life insurance policy then no P11D benefit will arise. Likewise, f the employee is the benificiary then it's a taxable benefit which should be reported on form P11D.
I've just found the following on Tolley's..........

Although not strictly health insurance, it is worth mentioning the tax rules on the provision of life insurance by the employer. As long as the employer arranges the life insurance and pays the insurance provider direct, the provision of life insurance is not a taxable benefit on the employee.
ITEPA 2003, s 307

Does this mean that the beneficiary of the policy doesn't affect the treatment either way and life insurance is always a non taxable benefit?? I'm very confused!

Regards

I am afraid that your link doesn’t work but here is a link to S307 ITEPA 2003.

http://www.legislation.gov.uk/ukpga/2003/1/section/307

Whilst I wouldn’t claim any degree of expertise on this it does seem fair to say if an employer takes out an insurance policy on the life of an employee that is not a taxable benefit for the employee. However if the beneficiary of the policy is someone other than the employer the overall effect will be that the Insurance policy constitutes an “
Employer-financed retirement benefits scheme”.

That being the case, the person who receives a pay out on the death of the insured will be liable to tax as if the pay out was employment income.

http://www.hmrc.gov.uk/manuals/eimanual/EIM15055.htm

So, as far as HMRC is concerned, its swings and roundabouts.

If an employer pays life insurance premiums on behalf of an employee that will be a taxable benefit for the employee but the beneficiary will receive the insurance pay out tax free.

Otherwise, there will be no taxable benefit for the employee, but the beneficiary will be liable to tax on the insurance pay out.

needingadvice

A recently new type policy called a relevant life policy can be paid for by an employer and set up in a trust for the employees dependants. If a policy is set up under these rules then there is no P11D benefit.

Also registered group life schemes such as regular death in service schemes of which the posts above are referring to do not cuase P11D problems, however a claim on one of these would count towards the lifetime pension allowance.

relevantlifepolicy.com offers more information on how these offer a tax efficient way for company directors to pay for personal life insurance.