Excepted group life policies meaning

Overview of the types of death in service benefits and their tax treatment Employers can provide three common kinds of death in service protection, often described as ‘life assurance’ or ‘life cover’, by arranging a life policy for their staff who are eligible: the registered group life policy the relevant life policy the excepted group life policy These arrangements share the following common features and conditions: employees eligible for cover must be aged from 16 to 74 inclusive using a discretionary trust will normally prevent any inheritance tax (‘IHT’) charge arising on an employee’s death premiums paid by the employer are usually deductible for tax premiums are not treated as a taxable benefit in kind for employees The registered group life policy This is a group arrangement that is registered with HMRC under Part 4 of the Finance Act 2004 (FA 2004). It provides employers with a flexible way to meet...

Statute provides for two tax-efficient alternatives to a life assurance policy held within a registered occupational pension scheme: the relevant life policy (RLP), and the excepted group life policy (EGLP) In statute, an EGLP falls within the wider RLP concept; nevertheless, because it insures more than one life—rather than a single life—it is treated as a distinct insurance product line. For clarity in what follows, ‘RLP’ is used for single-life policies and ‘EGLP’ for multiple or group life policies. Originating in section 539A of the Income and Corporation Taxes Act 1988 in the run-up to ‘A‑day’, and now set out in the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) and in sections 480–482 of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005), EGLPs and RLPs provide lump sum benefits on death before age 75 for: employees directors (including single directors of a service company) ‘salaried’ partners taxed under PAYE The...