Group life policies are often purchased by employers see IPTM1125
Employees
Group life policies which insure individuals up to the age of 75 and only provide death benefits for the dependants of that person will not give rise to income tax charges see IPTM7020
For Full guidance see IPTM 7015 to IPTM 7060
A contribution paid by an employer in respect of their employee scheme is not taxable as earnings for the employee concerned; see PTM031100
Employers
Tax relief on employer contributions is given by allowing contributions to be deducted as an expense in computing the profits of a trade and so reducing the amount of an employer’s taxable profit ;
see PTM043100 and see BIM45525
Tax relief can only be given on contributions that have actually been paid. The amount shown in the profit and loss account in respect of the obligations of defined benefit schemes may be substantially different from the amount of contributions paid to the scheme, but it is only the amount actually paid that can be considered for tax relief. see PTM043200
Contributions in respect of members who are directors who are shareholders or connected to a controlling director
Broadly, the employer’s contribution will be wholly and exclusively for the purposes of the trade if the contribution paid in respect of a controlling director or a connected employee is in line with a contribution that would have been made for an unconnected employee in a similar situation.
Case law – Beauty Consultants Ltd v Inspector of Taxes [2002] SpC 321 see BIM45530
General guidance on employer’s contributions in the Business Income Manual at BIM46000.
Roy Accountants 