Relevant Life Policies for Expat Company Directors

Introduction

For a UK company director — whether living in the UK or abroad — personal life assurance arranged and paid for personally costs money that has already been taxed. The director draws a salary or dividend, pays income tax and national insurance, and uses the net amount to pay an insurance premium. The insurer then provides no tax relief.

A relevant life policy (RLP) changes this entirely. The company pays the premium from pre-tax revenues, claiming a corporation tax deduction in the process. The premium is not a benefit in kind for the director, so no income tax or national insurance is triggered. And when a claim is made, the death benefit reaches the director's family through an excepted trust, free of income tax, free of national insurance, and outside the director's estate for inheritance tax purposes.

The efficiency gain is material. At the 2026 main corporation tax rate of 25% and the higher rate of income tax at 40%, the effective cost saving compared with paying a personal premium from post-tax income can exceed 40% of the premium value over the life of the policy.

This guide sets out exactly how relevant life policies work, who qualifies, how they are structured, the sum assured limits, and the specific considerations for expat directors of UK companies who are resident abroad.

---

The Core Structure

A relevant life policy is governed by Section 393B of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) and the relevant HMRC guidance in the Employment Income Manual (EIM). The defining features are:

• The employer is the policyholder and premium payer. The policy is taken out by the company on the life of an employee or director.
• The policy must be a pure term life policy. There is no investment element, no surrender value, and no critical illness element. If a director wants critical illness cover, it must be arranged separately (as a personal policy or as a keyman policy on different terms).
• The policy must be held in a specific trust — the excepted group life trust. This is the mechanism that keeps the death benefit outside the employee's estate and free of income tax.
• The beneficiaries of the trust are the employee's dependants or personal representatives. The exact definition of eligible beneficiaries is set out in the policy and trust documentation.

---

Tax Treatment of Premiums

HMRC confirms in its Business Income Manual (BIM45525) and the Employment Income Manual (EIM15045) that relevant life policy premiums paid by the employer:

1. Are corporation tax deductible as a business expense for the employing company — provided the policy is a genuine employment benefit and not a disguised personal payment.
2. Are not a benefit in kind for the employee or director. The premium does not appear on the director's P11D. No income tax and no employer or employee national insurance contributions are payable on the premium.

This treatment applies as at 2026 and has been confirmed in HMRC guidance that has remained substantively consistent since the relevant life policy framework was introduced in 2006. However, HMRC's treatment of individual cases may vary, and policies should be structured and documented carefully.

The payout on death is made to the excepted trust and from there to the beneficiaries. It is not income in the hands of the beneficiaries and does not trigger a chargeable event. Because the policy is held in trust, it does not form part of the deceased's estate for IHT purposes.

---

The Excepted Group Life Trust

The excepted group life trust is the specific trust structure prescribed for relevant life policies. "Excepted" refers to the fact that such schemes are exempt from certain pensions-related tax rules that would otherwise apply to employer-arranged life cover.

The trust typically names:

• The company as the settlor (it places the policy into the trust)
• A set of trustees — usually the directors of the company plus an independent trustee
• The employee's dependants as beneficiaries — typically defined broadly to include spouse, civil partner, children, and financial dependants

The trust deed is provided by the life assurance provider and is a standard-form document. It does not need to be bespoke, though it should be executed correctly at the time the policy is issued.

A key point: the relevant life policy trust operates as a discretionary trust for many providers, giving trustees the flexibility to distribute the proceeds in the most appropriate way for the beneficiaries' needs at the time of the claim. This means the death benefit can be directed to a spouse in full, split between a spouse and children, or held for minor children as appropriate.

---

Sum Assured and Remuneration

The maximum sum assured available on a relevant life policy is not capped by statute, but HMRC expects the sum assured to be proportionate to the employee's remuneration and their legitimate financial need. HMRC has indicated that very high multiples of remuneration could attract scrutiny, and providers typically apply internal limits.

In practice, providers apply a maximum of:

• 25× total remuneration (salary plus regular bonuses, but usually excluding dividends in the strictest sense — though some providers include dividends for director-shareholders)
• Some providers apply a lower cap of 10× or 15× remuneration for directors with limited salary and high dividend income

Where a director draws a low salary (common in owner-managed companies structured for tax efficiency) but significant dividends, the sum assured available may be lower than the director would wish. This is an important planning point: directors considering an RLP should review their remuneration structure and understand how each provider calculates the eligible remuneration figure.

---

The Distinction from EGLP

An excepted group life policy (EGLP) provides life cover for a group of employees under a single scheme rather than on an individual basis. For a company with multiple employees — say, 10 or more — an EGLP can be more efficient to administer than individual RLPs for each person.

For small owner-managed companies with one, two, or three director-shareholders, the relevant life policy on an individual basis is the standard solution. There is no minimum number of employees for an RLP.

---

Expat Directors: Specific Considerations

A UK company director who is resident abroad — in Cyprus, UAE, Spain, Greece, or elsewhere — may wish to use a relevant life policy arranged through their UK company. The employment relationship that qualifies the arrangement must be genuine: the director must be employed by a UK company, receiving remuneration through a UK payroll, and the policy must be a genuine employment benefit.

Key questions for expat directors:

Does the director remain on the UK payroll? Some expat directors continue to receive a UK salary through the UK company's PAYE system even after moving abroad. Where this is the case and the director has a genuine employment relationship with the UK company, the RLP framework may be available. The director's tax residency does not, of itself, disqualify the arrangement from HMRC's perspective — the relevant conditions relate to the employer, not the employee's residency.

Will the provider accept a non-UK-resident? This is the practical question. Not all UK life assurance providers will underwrite a relevant life policy for a director who is resident in another country. Some providers limit cover to UK residents; others will cover residents of certain listed countries. This is an underwriting and commercial decision by the provider, not a legal one. A specialist adviser can identify which providers operate in this space.

Is the premium deductible for corporation tax? The corporation tax deduction for relevant life policy premiums applies to UK companies paying UK corporation tax. If the employing entity is a UK company, the deduction should be available regardless of whether the director is UK-resident.

What about the director's home country? If the director is tax-resident in Cyprus, UAE, or another country, the premium paid on their behalf by the UK company may also need to be considered under that country's tax rules. In many jurisdictions, a death benefit paid through a trust to beneficiaries will not be taxable — but this should be confirmed with local tax advice.

---

When a UK RLP Cannot Be Arranged

Where a UK company director is unable to access a relevant life policy — either because their residency is not accepted by available providers, or because the director's company is incorporated outside the UK — alternative structures are available.

For offshore company structures (Cyprus holding companies, UAE entities, BVI companies), international providers in the Isle of Man or Guernsey can arrange employer-owned life assurance that operates on similar principles. The tax treatment will be governed by the laws of the company's country of incorporation rather than UK tax rules.

For directors of offshore companies who also hold a UK company, a hybrid approach is sometimes appropriate: a relevant life policy through the UK entity for the UK-connected portion of remuneration, and separate international cover for the broader financial exposure.

---

How Global Investments Can Help

Global Investments works with company directors across multiple international markets to identify and arrange tax-efficient protection structures. For UK company directors — including those resident abroad — our advisers can assess eligibility for relevant life policies, identify which providers will accept non-UK-resident applicants, and coordinate the trust documentation required.

Where a UK RLP is not available, we have access to international providers capable of arranging employer-owned offshore life assurance for Cyprus, UAE, and other international structures, ensuring directors can access similar benefits regardless of where their company is incorporated or where they are resident.

This guide is for information only and does not constitute tax advice. HMRC's treatment of relevant life policy premiums depends on the specific facts of each arrangement. Seek qualified professional advice before arranging any employer-sponsored life assurance. Tax rules can change.