Tax efficient Income Protection for the small business.

Transcription

1 Tax efficient Income Protection for the small business. Sub-heading in here This communication is aimed and directed at professional financial advisers only. It must not be distributed to, or relied upon by, retail customers.

2 What if I m ill? Statutory Sick pay Employment & Support Allowance The benefit replacing Incapacity Benefit Employment and Support Allowance (ESA) consists of two phases: Assessment phase Paid for the first 13 weeks whilst claimant is assessed. Main phase Payable if claim is successful 2 Source: DWP 2012

3 Employment and Support Allowance Main phase Weekly amount Single person in the Work Related Activity Group Up to Single person in the Support Group Up to Source: Directgov website, August

4 Executive Income protection. Taxation of premiums Employer - Premiums paid by the employer - Employer receives Corporation tax relief on premiums - No Employer NI to pay Employee - Not taxable as a benefit in kind This information is based on our understanding of current legislation, taxation law and practice, which may change. The value of any tax relief depends on the individual circumstances of the employer. 4

5 Executive Income protection. Key points Paid to the employer covers up to 75% of employee earnings 130k & 30k Pensions and NI Cover can include - Dividends - Employee pension contributions - Employer pension contributions - Employers NI Choice of deferred periods Payable to age 65 (minimum term is 5 years) Normal term commission applies 5

6 Executive income protection. Treatment of benefit Taxable in the hands of the employee The claim proceeds would be taxable in the hands of the employer albeit that there would be a corresponding deduction for the salary paid. 6

7 Executive income protection Good benefit for valued employees I.P. can be a lending requirement for loans Assists with returning employees to work 7

8 How to access tax efficient Income Protection Business protection menu application form 8

9 The Gender directive 21 st December Premium rises of up to 20% predicted Policy must be in force by the 21 st December Average premium for Executive Income Protection - 1,682pa 9

10 Which clients could benefit from this? 1. Company directors who prefer the company to pay for personal cover 2. Employers too small to access group IP schemes. 3. Directors / Employees wishing to top up benefits 4. Directors / Employees wanting to save money 10

11 What to do next Existing customers - Are they able to benefit from Executive IP. - Those who have changed employment status. Accountancy connections - Are they aware of Executive Income Protection? Local businesses wanting advice on forthcoming pension changes 11

12 Executive Income Protection support Policy and trust information Underwriting helpline

13 Important information Please note that benefits are only payable in the event of a valid claim during the chosen term. The policy doesn t have any cash-in value, and your protection will stop immediately if you stop paying premiums. AEGON is a brand name of Scottish Equitable plc. Scottish Equitable plc, registered office: Edinburgh Park, Edinburgh EH12 9SE. Registered in Scotland (No ). Authorised and regulated by the Financial Services Authority. (FSA register number ). An AEGON company. 13