The following Private Client guidance note Produced in partnership with Keith Bruce-Smith and Katie Walsh of Harcus Sinclair LLP provides comprehensive and up to date legal information covering:
There are three types of death in service benefit:
the registered group life policy
the relevant life policy
the excepted group life policy
They share the same characteristics:
employees eligible for the policy benefits must be aged between 16 and 74
the use of a discretionary trust should avoid any charge to inheritance tax on a given employee's death
employer-paid premiums are usually tax-deductible
premiums are not treated as a benefit in kind for employees
This is a group policy registered with HMRC pursuant to Part 4 of the Finance Act 2004 (FA 2004). It offers employers a flexible approach to meeting the death in service benefits promised to their employees. The policy, which must be registered as a scheme with HMRC, covers lump sum benefits payable on the death of an employee.
As soon as an employee satisfies the ‘eligibility’ and ‘actively at work’ conditions as below, they must be included on the policy. There must be a minimum of five members when the policy starts:
An employer can define eligible membership categories in a number of ways (eg by job grade, salary band or job type). Membership must be compulsory for all employees within the defined categories. Eligibility conditions
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