Yes, I work for a UK incorporated (limited) corporation.
On our Life Assurance program we specify our beneficiaries to receive payment upon death.
I don't have a copy of the description of the program. Just that it is a Life Assurance program.
Hi again.If the life cover was paid out your estate, it could be subject to Inheritance Tax (certainly not Income Tax) depending on who your assets were left to.Most employers will ask an employee to specify beneficiaries for the life cover so that, should you die in service of your employer, the payout will bypass your estate, be paid directly to your beneficiaries and escape Inheritance Tax. Your employers have asked you for the names of your preferred beneficiaries so you should confirm the tax implications as they understand them as they certainly appear to have considered them. I'm sure they will confirm what I've written here.I hope this helps but let me know if you have any further questions.
So basically, if I understand correctly, it appears that the administrators of the program have made provisions so that the beneficiaries pay no taxes (inheritance or income), right?
If you don't mind I will leave this open so as to provide you with any information I get from our HR department on this. Are you OK with this?
I asked the question and I got this answer:
As per policy,Life Assurance is a benefit that is not liable to National Insurance Contributions. For some employees, it may be liable to Income Tax by reference to the Pension Tax Allowances.Lump-sum payments made under this benefit will be subject to the Pension Tax Allowances but will not be subject to National Insurance Contributions.
What is your take?
Can you tell me what level of payout would be made please? Unless the payout exceeds £1.25 million. Take a look here for more information.
Don't I wish!!! It is very much less than that...
Good to know. Thank you for your help. Unless there is anything else I should know, I think we can close the case...