This presentation is directed at professional financial advisers only and should not be distributed to or relied upon by retail customers. AXA Protection Account Business Protection This presentation is written for you as a professional financial adviser. Please do not show this to your customers. AXA Business Protection Key Person and Loan Protection

This presentation is directed at professional financial advisers only and should not be distributed to or relied upon by retail customers. AXA Protection Account Business Protection Key Person Protection Topics to cover… Background to Key Person How it works How to calculate cover Taxation Loan Protection

This presentation is directed at professional financial advisers only and should not be distributed to or relied upon by retail customers. AXA Protection Account Business Protection Key Person Protection Tax We offer some information about tax within this presentation. This information is based on our understanding of current UK Tax legislation. Tax rules are subject to change and their value depends on the customers circumstances.

This presentation is directed at professional financial advisers only and should not be distributed to or relied upon by retail customers. AXA Protection Account Business Protection Key Person Protection The protection of business profits The protection of business loans The protection of directors loans What is it for? You can offer your clients Life Cover, Life or Early Critical Illness Cover or Critical Illness Cover

This presentation is directed at professional financial advisers only and should not be distributed to or relied upon by retail customers. AXA Protection Account Business Protection Key Person Protection Identifying the need… Business reports and accounts can assist in identifying the need for Key Person Protection. They may detail: Names of directors and their shareholding Directors’ remuneration Turnover, gross and net profit Liabilities Amounts owed on directors loans Profit trends over a number of years Number of employees and payroll costs

This presentation is directed at professional financial advisers only and should not be distributed to or relied upon by retail customers. AXA Protection Account Business Protection Key Person Protection How does it work? Business (Applicant) Key Person (Life Assured)

This presentation is directed at professional financial advisers only and should not be distributed to or relied upon by retail customers. AXA Protection Account Business Protection Key Person Protection Steps to writing business… Identify the life assured… Individuals whose skill, knowledge, experience or leadership contribute to the business’s financial success. There may be one or a number of people within a business whose death or serious illness could lead to a financial loss for the business.

This presentation is directed at professional financial advisers only and should not be distributed to or relied upon by retail customers. AXA Protection Account Business Protection Key Person Protection Steps to writing business… Identify the life assured Calculate the level of cover required… Multiple of salary calculation or Loss of profit calculation

This presentation is directed at professional financial advisers only and should not be distributed to or relied upon by retail customers. AXA Protection Account Business Protection Key Person Protection Steps to writing business… Identify the life assured Calculate the level of cover required… Multiple of salary calculation For Life Cover: Salary × maximum of 10 For Critical Illness Cover: Salary × between 5-7 Loss of profit calculation Either 5 x average net profit (3 years) Or 2 x average gross profit (3 years)

This presentation is directed at professional financial advisers only and should not be distributed to or relied upon by retail customers. AXA Protection Account Business Protection Key Person Protection Tax treatment… The rules often referred to by the Local Inspector of Taxes are commonly known as the “Anderson Rules”. They state that premiums for Key Person Cover may be eligible for tax relief if the; Policy must be intended to meet loss of profits resulting from loss of services of employee “ ” Sole relationship is that of employer and employee “ ” Policy is an annual or short term insurance “ ”

This presentation is directed at professional financial advisers only and should not be distributed to or relied upon by retail customers. AXA Protection Account Business Protection Key Person Protection In summary, for Life and Critical Illness: Tax treatment… If the Anderson rules have been met: If the Anderson rules have not been met: Premiums may receive corporation tax relief. Trading receipt may be taxable depending upon profitability Premiums will not receive corporation tax relief. Benefits will be treated as capital receipt and not taxed We can offer your clients all options – 20 year guaranteed and 20 year reviewable

This presentation is directed at professional financial advisers only and should not be distributed to or relied upon by retail customers. AXA Protection Account Business Protection Key Person Protection It is not a question of whether the business claims the relief, it is whether they are entitled to it Tax treatment… We have letters available on our website to send to HRMC Consult the local Inspector of Taxes

This presentation is directed at professional financial advisers only and should not be distributed to or relied upon by retail customers. AXA Protection Account Business Protection Loan Protection Businesses, partnerships and sole traders need to borrow for: New machinery New premises Credit or overdraft facility General development/expansion What is it for? Amount of cover = sum of the above

This presentation is directed at professional financial advisers only and should not be distributed to or relied upon by retail customers. AXA Protection Account Business Protection Loan Protection Taxation of premiums Premiums are not an allowable deduction from profits. Taxation of benefits Generally not liable to Corporation Tax Tax treatment…

This presentation is directed at professional financial advisers only and should not be distributed to or relied upon by retail customers. AXA Protection Account Business Protection Key Person and Loan Protection You should now know about; The different types of cover available and how they work How to calculate the level of cover The tax treatment for cover premium/proceeds Summary… Remember!

This presentation is directed at professional financial advisers only and should not be distributed to or relied upon by retail customers. AXA Protection Account Business Protection Key Person and Loan Protection You should now know about; The different types of cover available and how they work How to calculate the level of cover The tax treatment for cover premium/proceeds Summary… Key Person Protection is to replace loss of profits caused by the death or serious illness of the key person Loan Protection is to repay outstanding debts or loans in those circumstances

This presentation is directed at professional financial advisers only and should not be distributed to or relied upon by retail customers. AXA Protection Account Business Protection Key Person and Loan Protection… = risk mitigation! The protection of business profits The protection of business loans The protection of directors loans

This presentation is directed at professional financial advisers only and should not be distributed to or relied upon by retail customers. AXA Protection Account Business Protection Key Person and Loan Protection Your client is Male, 48 years old, a managing director of Sapphire Group limited. The business supplies chemicals to the brewery and catering industries. Have been in business for 4 years. His remuneration for the last 3 years has been £ 55k, £ 59k and £ 59k. Business accounts reveal this picture: Case study… The company has applied for £ 1 million key person cover on the life of the sales director - the company estimates he contributes 33% to company profits ’. He is also a major shareholder of the company. The purpose of the cover is to cover the potential loss in profits. £490,000£1.3 million£3.3 million2006 -£21,000 (loss)£1.2 million£3.4 million2005 £328,000£1.3 million£3.4 million2004 Net ProfitGross ProfitTurnover

This presentation is directed at professional financial advisers only and should not be distributed to or relied upon by retail customers. AXA Protection Account Business Protection Key Person and Loan Protection Case study… Can you … 1.Calculate the key person sum assured? 2.Who will own the policy? And why? 3.Who will pay the premiums? 4.What criteria would the business have to satisfy to obtain tax relief on contributions? Explain? 5.Assuming the business cannot claim tax relief on the contributions, what will happen to the sum assured, should a claim arise. 6.What advice would you give regarding how the benefits might be treated by HMRC

This presentation is directed at professional financial advisers only and should not be distributed to or relied upon by retail customers. AXA Protection Account Business Protection Key Person and Loan Protection Questions and further information… Any Questions? For further information Read our: AXA Protection Account - Business Protection Guide Quick Reference FAQ Or visit