Relevant Life Plan vs Group Life: Tax Comparison for Directors

For company directors seeking life assurance funded by their company, the choice between a relevant life plan and group life assurance is primarily a tax decision. Both products provide death-in-service benefits, both are paid for by the employer company, and both can be structured to pay benefits to the employee's family free of inheritance tax. But the mechanisms differ, and the tax implications — for the company, the employee, and their estate — diverge in important respects.

This guide provides a detailed comparison of the two products from a tax perspective, with particular attention to directors based internationally or operating through companies in multiple jurisdictions. All information reflects the current UK regulatory and tax position as of 2026.

---

What Is a Relevant Life Plan?

A relevant life plan (RLP) is an individually assessed life assurance policy taken out by a company on the life of an employee (including a director who is also an employee). It is designed to provide a death benefit — paid to a discretionary trust for the benefit of the employee's family and/or dependants — that is not treated as a registered pension scheme and therefore does not count against the employee's pension annual allowance or the lump sum and death benefit allowance (the lifetime allowance itself having been abolished on 6 April 2024).

The key legislative basis is section 393B of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003), under which employer-paid premiums for an RLP are a deductible business expense and do not constitute a taxable benefit in kind for the employee, provided specific conditions are met.

RLP Qualifying Conditions

For an RLP to qualify for the favourable tax treatment, the policy must:

• Only provide a lump sum benefit on death (it cannot include critical illness or income protection benefits)
• Be non-investment (the policy must not have a surrender value or investment element)
• Be whole of life or term assurance
• Be written in trust for the benefit of qualifying individuals (employee's family, dependants, or the employee themselves)
• Be taken out by the employer on the life of the employee

Note: Relevant life plans are a UK tax concept. They apply where the company is UK-based, the premiums are paid from a UK company, and the employee has earnings subject to UK income tax. Their applicability to internationally based directors and companies requires careful analysis (see below).

---

What Is Group Life Assurance?

Group life assurance (GLA) — often referred to as death-in-service cover — is a policy taken out by an employer for a group of employees. The employer is the policyholder; the employees are the members; and the benefit is paid to the employee's nominated beneficiaries (or into a discretionary trust) on death.

GLA premiums paid by an employer are:

• Deductible as a business expense for corporation tax (provided they are incurred wholly and exclusively for the purposes of the trade)
• Not a taxable benefit in kind for the employee (provided the scheme qualifies)
• Not subject to National Insurance Contributions on the premium

Benefits paid under a registered GLA scheme are typically free of income tax and inheritance tax if the trust structure is correctly set up.

---

Tax Comparison: RLP vs Group Life

Corporation Tax Treatment

Both RLP premiums and GLA premiums are deductible as a business expense, reducing the company's taxable profits.

RLP — the premium is paid by the company and is treated as a staff cost, deductible against corporation tax.

GLA — similarly deductible. For smaller employers, the practical difference is minimal; both structures achieve the same corporation tax deduction.

Income Tax and Benefit in Kind

This is where the distinction between small and large employers becomes relevant.

RLP — premiums do not create a P11D benefit in kind for the director/employee, provided the policy qualifies under section 393B ITEPA 2003. No income tax is payable by the employee.

GLA (registered) — premiums paid by the employer for a registered group life scheme are also exempt from benefit in kind taxation under the registered pension scheme provisions in ITEPA 2003. For GLA to be fully tax-exempt, it must be set up as an "excepted group life scheme" (outside of registered pension schemes) for directors with enhanced or fixed protection, or as a registered scheme for mainstream employees.

Key distinction: For directors with large pension funds, particularly those holding enhanced or fixed protection (preserved from the former lifetime allowance regime), placing life cover inside a registered pension scheme (which is where some GLA arrangements sit) can cause the death benefit to count against the lump sum and death benefit allowance — with any excess taxed on the recipient at their marginal rate of income tax. An RLP or an excepted group life scheme avoids this problem entirely because neither is a registered pension scheme.

Inheritance Tax (IHT)

Both RLPs and GLA can be structured to avoid IHT on death benefits:

RLP — the policy is written in a discretionary trust from inception. The death benefit passes to the trustee and is distributed at their discretion to the family and dependants. Because it is held in trust (not forming part of the estate), it should be free of IHT.

GLA — similarly, GLA benefits are typically written in trust. A group discretionary trust is established by the employer. Provided the trust is properly structured and the benefit is paid to the trust rather than the estate, it should be IHT-free.

Practical difference: With an RLP, each individual director has their own trust deed, which can be tailored to their personal circumstances and beneficiary wishes. With GLA, the trust is a group arrangement covering all employees; individual directors may have less flexibility to tailor the discretionary beneficiary class.

National Insurance Contributions

RLP — premiums do not attract NICs. There is no employer or employee NICs liability on the premium payments.

GLA — similarly, GLA premiums are exempt from NICs under Class 1A provisions, provided the qualifying conditions are met.

Small Companies: The Case for RLP

For small companies with a single director-employee (or very few employees), group life assurance may not be commercially available from mainstream insurers on favourable group terms — minimum membership requirements typically require at least two to five members. An RLP is available for a single individual and provides equivalent tax treatment to GLA. This makes the RLP the go-to product for sole-director companies and family businesses with small headcounts.

---

International Considerations for Directors

Directors Resident Outside the UK

The RLP tax treatment — specifically the section 393B ITEPA 2003 exemption — applies where the employee has earnings charged to income tax under ITEPA 2003. For a director who is not UK tax-resident (for example, based in the UAE, Cyprus, or Thailand), their employment income may not be subject to UK income tax. The question then arises: does the RLP still provide the expected tax treatment?

This is a complex area. Key issues include:

• If the company is UK-incorporated and the director's service is partly or wholly outside the UK, the allocation of earnings subject to UK income tax is determined by the employment income sourcing rules
• If the director has no UK-taxable earnings, they cannot benefit from the section 393B exemption in the same way
• The deductibility of premiums for the company (corporation tax) may be unaffected, but the employee's position differs
• Local tax in the director's country of residence may treat the premium as a taxable benefit (since the UK ITEPA exemption has no force outside the UK)

For internationally based directors, specialist advice is essential before assuming that the domestic UK tax analysis of RLP applies to their situation.

Group Life for International Companies

Many international group life arrangements are placed through offshore insurers (Isle of Man, Bermuda, Cayman Islands) using trust structures governed by offshore law. These can deliver comparable economic outcomes to UK-based RLP or GLA arrangements, but the applicable tax analysis for the company (deductibility) and the employee (benefit in kind in their country of residence) differs from the UK domestic position.

Excepted Group Life and Pension Lifetime Allowance

Following the abolition of the lifetime allowance charge in April 2024, some of the pressure to use excepted group life (rather than registered GLA) has reduced. However, the LTA abolition remains politically contested, and the new regime under the Finance Act 2024 introduces different mechanisms for taxing large pension pots. Directors with significant pension wealth should still assess whether registered group life causes any adverse interaction with their pension planning.

---

Practical Decision Framework

Factor	RLP Favoured	GLA Favoured
Company headcount	Small (1–4 directors/employees)	Larger group (5+ members)
Pension protection status	Enhanced/Fixed protection holders	Standard protection
Individual trust flexibility	Required	Not required
International residency	Requires specialist analysis	May need offshore structure
Administration simplicity	Simple for small companies	Efficient for larger groups
Underwriting	Individual	Group (no medicals below FCL)

---

Compliance Caveat

Tax legislation in the UK and internationally changes, and the treatment of life assurance premiums and benefits is subject to HMRC guidance and case law. The abolition of the lifetime allowance charge and subsequent legislative changes may affect the RLP vs GLA analysis. This guide reflects the position as of 2026 but should not be relied upon without current, qualified professional advice. Tax advice for internationally based directors requires input from tax specialists in all relevant jurisdictions.

---

How Global Investments Can Help

Global Investments advises directors — including those based internationally — on the most tax-efficient structure for employer-funded life assurance. Whether you need an individually structured RLP for a single-director company, an excepted group life scheme for a small team, or an international group life arrangement for a multi-country business, our advisers and specialist tax partners can design, structure, and implement the right solution.

Contact us for a confidential consultation, particularly if your circumstances involve international residency, complex pension planning, or multi-jurisdiction company structures.