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Financial Advice and Planning

Ludlow Wealth Management

Insurance - Key Personnel

A small business is more dependent than most on its directors and key employees. Ludlow advise upon a range of specialist insurance to protect your business should the worst happen.

There’s a better way to buy life insurance for yourself and your key employees. With a relevant life policy the business makes the payments, not the person who’s covered. That means your business won’t pay any national insurance contributions or income tax on the premiums but you still get the benefits of corporation tax relief. And that all adds up to big tax savings.

How a Relevant Life policy can cut company costs

Premium

Ordinary Life Cover
£1,000

Relevant Life Policy
£1,000

Employee's National Insurance Contribution at 2%

£34

Nil

Company

Income Tax @ 40%

£690

Nil

Employer's National Insurance Contribution at 13.8%

£238

Nil

Total Gross Cost

£1,962

£1,000

Company Net Cost

Corporation Tax Relief

£392

£200*

Net Cost

£1,570

£800*

So if you have an existing policy or you’re thinking of arranging a policy for yourself or your employees, talk to a Ludlow adviser about relevant life policies and see how much the taxman could save you.

*Assumes that corporation tax relief at 20% has been granted under the ‘wholly and exclusively’ rules. In both cases we’ve assumed a payment of £1,000 each year for the life cover on an employee who’s paying income tax at 40% and employee’s National Insurance at 2% on the top end of income. We’ve also assumed that the employer is paying corporation tax at the small profits rate of 20% and will pay employer’s National Insurance at the contracted-in rate of 13.8%.

Key Person Protection
Many small businesses rely on a few individuals who perform a number of roles. Key person protection can help protect a business if one of its key people dies or becomes critically ill. A firm can use the lump sum in any number of ways including training and recruitment of a new member of staff, employing an interim manager, to help pay off a loan or overdraft or to pay suppliers to lessen financial pressure.

Shareholder Protection
Also referred to as partnership protection, shareholder protection is a life insurance policy, that when used with a legal agreement, helps surviving shareholders or partners keep control of the business if one of their number dies or is diagnosed with a critical illness.  By putting shareholder protection in place, you could make sure the business gets the funds to buy back the shares from a critically ill partner or their estate.

Pensions
Changes in pensions legislation came into force in October 2012 meaning that all employers are required to enrol eligible jobholders into a qualifying pension scheme. The automatic enrolment reform is being staged over a six-year period, depending on the size of the employer. Any employer with a PAYE scheme registered from 1 April 2012 will have enrolled their staff by February 2018 and each company has their own 'staging date' by which time they have to comply. The downloadable Auto-enrolment Guide has been prepared by Ludlow, and it explains all the key dates and actions you need to take.

Ludlow can advise you on the practicalities of setting up a workplace pension scheme, including the benefits of doing so via a salary sacrifice arrangement with the commensurate savings in national insurance contributions.

Financial Planning to meet your personal goals
Personal financial planning involves understanding your personal goals and opportunities, family commitments and retirement plans. 'We take time to listen to your short, medium and long term goals and to understand where they fit in your order of priority. Once we have understood your essentials and your desirables, we can begin to help you develop an investment and savings plan to achieve them and we can implement a regular review process to monitor progress and make adjustments as and when they are needed. Our motto "Your finances under control" shapes everything we do'.

PLEASE NOTE: The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

What next?
Talk to one of our financial advisers about any of the services above. They will help you identify your individual requirements and guide you through the various options available.

Call Stephen Fox on 01704 500324 or email stephen.fox@ludco.co.uk.
Or find out more at www.ludco.co.uk.