I have just taken on my first limited company's accounts to trial balance. I have been working through the comapny bank statement and he has 2 life assurance polices taken out by direct debit every month. When I questioned why the company was paying for his life assurance, he said he had been advised to do this by his former accountant. I would have thought this was a personal expense and should be paid from his personal account. Is there something that I am not aware of??
I think I am right in saying that because it is a limited company he will be a employed director of the company and as such the life assurance will be treated as benefit in kind.
I haven't fuly come across this a such but I believe it will depend on the benificiary. As I understand it in certain circumstances a limited company may want to insure key personel if they are integral to the operation of the business. If however the benefit went to spouse that would be a different matter.
I did have a similar case with a partnership loan agreement where on the death of a partner a loan was paid off. That is not allowed for tax purposes
