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Many landlords who run their buy-to-let portfolio through a limited company think carefully about tax on almost everything except life insurance. Changes to mortgage interest relief pushed lots of landlords towards incorporation, and accountants became a bigger part of the picture. But the life policy often stayed exactly as it was: paid personally, out of money that had already been taken from the company and taxed. If that sounds familiar, it may be time to take another look.

Relevant life isn't only for trading businesses

Relevant life insurance is available to directors and employees of limited companies. It isn't restricted to businesses with large workforces or payroll departments, so landlords who hold their properties in a company and pay themselves through it may also be eligible.

The difference lies in how the cover is paid for. A personal policy is funded after the company has made a profit, tax has been paid and income has been drawn. With relevant life, the company pays the premium itself. According to HMRC, where the qualifying conditions are met, the benefit-in-kind charge may be exempted and no Class 1A NIC is due on benefits that are exempt from income tax.

Where the saving comes from

Any saving generally doesn't come from the insurer charging less. It comes from not paying for cover with personal income that has already been taxed. Where a policy is set up correctly and receives the expected tax treatment, it isn't a P11D benefit in kind, no Class 1A National Insurance is due on that exempt benefit, and the premium may be deductible for corporation tax depending on the company's circumstances.

Relevant life can save company directors up to 49% compared with a personal policy. This may apply in some cases, particularly where premiums would otherwise be paid from taxed income, but it is an upper-end figure that depends on individual circumstances rather than a guaranteed result. How much you could save will depend on how you take income, your company's tax position and whether the arrangement is structured properly.

Being clear about corporation tax relief

Relevant life premiums are often described as a tax-deductible business expense, and in many cases they are. However, HMRC's guidance takes a careful approach. Business expenses are only deductible if they are incurred for the purposes of the trade, and the tax treatment of insurance depends on what is being insured and why. For landlords, the accurate position is that corporation tax relief may be available when the policy is set up correctly and the facts support the deduction. It is not guaranteed in every case.

That doesn't weaken the case for relevant life. It simply means each situation should be properly assessed rather than treated as a one-size-fits-all rule.

Use our relevant life insurance calculator to compare the cost of a relevant life policy with a personal one.

Don't overlook the trust

The premium is only part of the picture. The policy also needs to be set up so the payout reaches the right people without unnecessary delay. We offer a free trust writing service, and our trust team can help you complete and submit the forms at no cost. The trust sets out who should receive the money.

This matters for landlords because, even when the properties are held in a company, the family often still depends on the director's income and decisions. If a landlord dies unexpectedly, a properly set up trust can help the payout reach beneficiaries more smoothly than a personally owned policy that falls into the estate. Faster access for loved ones and the potential to avoid probate delays are two of the main reasons to use a trust.

How this might look in practice

Picture a landlord whose portfolio sits in a limited company. They take a combination of salary and dividends and have had a personal life policy for years, set up before the portfolio expanded and the company became the main vehicle for the business. The premium still comes out of their personal account each month.

If similar cover were arranged as relevant life through the company, the business would pay the premium instead. If the policy qualifies, it shouldn't be treated as a P11D benefit in kind, no Class 1A NIC should be due on that exempt benefit, and corporation tax relief may be available under the usual rules. Write the policy in trust as well, and the payout process for the family can be simpler and quicker than relying on a personal policy that sits within the estate.

That is why relevant life deserves a closer look from incorporated landlords. It's about more than trimming a monthly premium. It's about holding the policy in the right place and structuring the payout properly from day one.

It isn't right for everyone

HMRC's definition of relevant life is quite specific: employer-funded life cover on a single individual, with no surrender value and restrictions on who can benefit. It may not be suitable for people who are self-employed or sole traders, who might be better suited to a personal life insurance policy.

So rather than rushing to replace your current policy, start by reviewing it. Ask four questions: who owns it, who pays for it, is it written in trust, and would relevant life be more efficient given your company structure?

Key points to take away

If you're a landlord running your portfolio through a limited company, relevant life insurance is worth considering. It can move the premium from taxed personal income to the company, avoid the usual benefit-in-kind treatment where the exemption applies, avoid Class 1A NIC on that exempt benefit and potentially qualify for corporation tax relief when set up correctly. Combined with trust writing, it can also give your family stronger protection, which many landlords don't think about until it's too late.