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Your Total Guide To Business
We talk about the need for Public Liability Insurance, Employer’s Liability Insurance and Professional Indemnity Insurance – because these are statutory, contractual or just good business requirements.
However, there is a whole area that is often ignored – and that’s the area of personal insurance – specifically, life insurance and critical illness insurance.
This is partly because it doesn’t seem relevant to a business, and often, for start-ups in particular, money is tight and - such insurances seem an unaffordable luxury rather than a necessity. Then, as the business takes off, there is often little time to think about such ‘personal’ matters – and it gets overlooked.
However, I think accountants and clients need to reassess how they think about life insurance and critical illness insurance.
The biggest danger a small business faces is the risk of having to cease trading instantly if the business owner dies or is out-of-action with an injury or illness for any length of time. A relevant insurance policy means that the right sort of expertise can be hired in an emergency – which may enable the business to survive until the business owner recovers or another solution can be worked out. On the other hand, the lack of the right insurance policy can have a devastating effect on the business owner and their family.
On top of that, ‘relevant’ life insurance is a type of insurance which, when applying to a key company director, is a tax deductible expense in a company’s accounts (and not a taxable benefit in kind) so, effectively, it is discounted compared to normal life insurance policies.
At the moment, I don’t believe there is an equivalent ‘relevant’ critical illness policy that HMRC accept as a tax deductible expense and not a taxable benefit in kind.
So, on starting a business, it’s worth talking to a financial advisor about these matters, as well as to your accountant.
AMS Accountants in Swindon provide a complete accountancy service for small businesses in Wiltshire and a monthly accountancy service for contractors throughout the UK.
Delta 606, Welton Road, Swindon, SN5 7XF
Website Email 01793 818400
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