Can a Husband and Wife Both Have a Relevant Life Policy Through Their Company?

By Damian Youell, Senior Mortgage Broker and Company Director at NeedingAdvice.co.uk

Yes. Where both a husband and wife are employed by or act as directors of their limited company, each can potentially have their own Relevant Life Policy arranged through the business.

When properly structured under qualifying legislation (such as Chapter 2 of Part 6 of ITEPA 2003 / HMRC EIM15010), a Relevant Life Policy is an employer-funded life insurance policy established under an individual discretionary trust. It is designed to provide death-in-service benefits directly to the employee’s or director’s family, dependants, or named beneficiaries.

Information checked: 25 September 2026. (Tax rules and statutory conditions are subject to change).

How Two Separate Policies Work in Practice

Where both spouses are bona fide working directors or employees taking remuneration from the company:

• The company acts as the employer applicant and pays the premiums for two separate, individual policies.
• Each policy is written into a separate discretionary trust from day one for the benefit of the individual’s chosen beneficiaries (typically the surviving spouse, children, or nominated family members), rather than for the benefit of the company.
• If one spouse passes away, the policy proceeds are paid directly by the insurer to the trustees of the discretionary trust for distribution to the beneficiaries. The payout does not pass into the company’s bank account, nor does it form part of the company’s trading income.

Tax Treatment and Conditions

Where all statutory conditions are met, a Relevant Life Policy offers distinct tax efficiencies:

• Corporation Tax: Premiums may be deductible for corporation tax purposes where the relevant conditions are met (specifically satisfying the statutory “wholly and exclusively” test for business expenses under section 54 of CTA 2009).
• Benefit in Kind: Premiums are not treated as a taxable benefit in kind (P11D) for the director or employee, and do not attract National Insurance contributions.
• Inheritance Tax & Estate Planning: Because the policy is written into an individual discretionary trust, policy proceeds generally do not form part of the deceased’s personal estate for Inheritance Tax purposes, though the specific trust structure and subsequent distributions may have important IHT implications depending on individual circumstances. (Estate and inheritance planning is not regulated by the Financial Conduct Authority.)

Share Ownership and Succession Considerations

A Relevant Life Policy is designed as family protection and does not itself create a mechanism for a surviving spouse or shareholder to purchase the deceased’s shares.

Where co-directors wish to arrange business succession or share purchase funding:

• Appropriate cross-option agreements or shareholder arrangements should be put in place, and the overall share ownership position must be carefully considered.
• If the company itself uses funds to buy back its own shares from an estate, HMRC rules dictate that the payment is treated as an income distribution (subject to dividend income tax rates) unless specific statutory conditions for capital treatment under sections 1033–1048 of CTA 2010 are satisfied.
• If co-owners require funds specifically to purchase shares from each other’s estates, business protection arrangements (such as Shareholder Protection written under business trusts with cross-option agreements) should be evaluated alongside personal family protection.

Key Rules and Eligibility

• Employed Status: Both spouses must be genuine employees or office holders (directors) receiving remuneration from the company. Sole shareholders who receive no salary or director’s remuneration cannot qualify.
• Statutory Limits: The policy must meet the requirements of section 393B of ITEPA 2003: it can only provide death benefits (or qualifying terminal illness benefits), cover must cease by age 75, and it must not have a surrender value.
• Commercial Remuneration: Total remuneration, including pension contributions and protection benefits, must remain commercially justifiable for the duties performed to support corporation tax deductibility.