The Benefits of Relevant Life Plans | Wilson Organisation


December 5, 2016

The Benefits of Relevant Life Plans

The Benefits of Relevant Life Plans

Relevant Life Plans (RLP’s) are a way of providing death-in-service benefits on an individual basis no matter how small your business is.

RLP’s could suit higher paid directors, business owners and other employees who want higher levels of life cover, with the tax and other benefits that normally only apply to large group schemes.

Who would benefit from RLP’s?

  • Small businesses that don’t have enough eligible employees to warrant a group life scheme
  • High-earning employees or directors who have substantial pension funds and don’t want their benefits to form part of their lifetime allowance
  • Employees of any type of business
  • Members of group life schemes who want to top up their benefits
  • RLP’s aren’t suitable for self-employed or equity partners

What are the benefits?

  • Although the company makes the payments, they’re not normally treated as a benefit in kind, so they’re not included in your income tax assessments. For a higher rate taxpayer, this could be a significant saving
  • Unlike a registered group scheme, the benefit won’t form part of your annual or lifetime pension allowance
  • These payments may be treated as an allowable expense for the company in calculating its tax liability, as long as the local inspector of taxes is satisfied they qualify under the ‘wholly and exclusively’ rules

What’s the maximum amount of cover under a Relevant Life Plan?

The legislation does have some limits to qualify for the tax concessions, to ensure these are met:

  • The cover must be paid in a single lump sum before the age of 75
  • Only death benefits can be provided
  • Benefits must be paid through a discretionary trust
  • Beneficiaries are normally restricted to family members and dependants

What changes can the company can make to the plan?

The plan is flexible, so includes options for your employer to increase the cover following certain life events:

  • Getting married or divorced or entering into or dissolving a civil partnership
  • Moving house
  • Having a baby or adopting a child
  • Getting a pay rise

What are the advantages of using a discretionary trust?

Having benefits paid through a trust makes sure they can’t be taxed as part of the company’s trading income, nor do they form part of the company’s assets.

The trust is discretionary, allowing trustees to be flexible in who they pay benefits to. It’s possible for the person covered to guide the trustees in their decision making and a nomination form is included in the trust to enable the person covered to express their wishes. Although this isn’t legally binding on the trustees, it helps to guide them.

Using a trust also makes sure that in most circumstances benefits are paid free of both income tax and inheritance tax.

Are there any disadvantages?

There are restrictions in the legislation on who benefits can be paid to. The use of the trust is the most practical way to make sure you meet these requirements. The trust includes dependants of the person covered within the class of potential beneficiaries.

If you’d like more information, please get in touch Richard Dilley


Over 100 years of innovation

  • 1914

    A successful launch! The Wilson Organisation was founded in Nottingham by Harold Wilson and became the first company in the East Midlands to offer a comprehensive insurance policy to the region’s fast-growing band of automobile drivers. Innovation from day one.

  • 1920s

    During the 1920’s, Wilsons developed its commercial insurance offering under the stewardship of Harold Wilson. Hopping forwards 80 years, Wilsons has developed a number of industry specialisms including a particular expertise in the food and drink sector. We created a unique insurance offering called “FoodProtect” and, through this service, have been able to deliver intelligence and cost-effective insurance programmes to a broad spread of leading food producers. The best thing since sliced bread? Maybe not, but we’re working on it.

  • 1949

    John Prow joined Harold Wilson in the business, marking the first generation of the Prow family’s involvement in The Wilson Organisation. Wilsons’ clients included leading Nottingham firm Boots The Chemist plus a number of operators in the burgeoning railway sector. With post-war regeneration beginning apace, the firm’s fledgling construction expertise quickly developed into one of our leading offerings and this continues through to the present day, with clients including national and regional builders, developers, contractors, sub-contractors and architects.

  • 1960s

    The 1960s were the start of a new era for The Wilson Organisation. Harold Wilson and John Prow died on the same day in 1963, Harold of illness and John in a car crash. This left John’s son, John J Prow, to run the growing business at the age of 27. Under his youthful direction, Wilsons benefited from a new energy and direction. John J Prow, who had joined in 1960 in a new business role, led the move into our current premises at Wilson House in 1964 and then launched the financial services division in the following year.

  • 1990s

    The late 1990s heralded the start of the third generation of the Prow family’s involvement in the business. Managing Director Charlotte Prow joined in 1998, to be followed by the firm’s Chief Executive, Annabel Prow, in 2002. Product and service innovation continued apace with the launch of a corporate finance specialism in 1997, which continues to deliver valuable cost-savings and insights to the region’s dealmakers.

  • 2000s

    Now century on from the launch of The Wilson Organisation in 1914, the company continues to encourage innovation and reward good ideas. Within the financial services team, 2008 marked the launch of “Flex”, a powerful employee benefit programme and the development of “WRAP”, an investment tool with a unique level of investor control and transparency. Meanwhile, our insurance advisers worked quickly to bring to market a specialist insurance policy for insolvency practitioners.

  • 2010s

    2010 saw the launch of the Midlands Family Business Awards by Wilsons, the UK’s only independent not-for-profit Awards for family businesses. Now in their fifth year, the Awards have raised almost £20,000 for charities supporting families and young people. In 2014 we are celebrating Wilsons’ centenary, a significant milestone in Wilsons’ history.

Registered Office:
Wilson House, 1/3 Waverley Street, Nottingham, NG7 4HG

Registered in England Number 862690 - Members of British Insurance Brokers Association

Harold Wilson (Insurances) Ltd. and Harold Wilson Financial Services Ltd. are authorised and regulated by the FCA (Financial Conduct Authority)