If you have taken out a finance facility for your business, have you got a safety net if the worse was to happen?
Partnership Insurance can mean you can confidently purchase your partner’s share of the business
If your business partner sadly passes away or wants to leave the partnership when they are diagnosed with a critical illness, would you be able to buy your partner’s share of the business?
Partnership protection is taken out to ensure that funds are available to allow the remaining partners in a business to buy a partner’s shareholding if they die, become terminally ill or suffer a critical illness.
In return, this will give each partner peace of mind and security knowing that their beneficiaries or personal representatives will have a ready and willing buyer instead of having to maintain an interest in the business.
Who pays the premiums for a Partnership Protection Insurance policy?
The individuals pay their own premiums for the policy. The premium can be different depending on the partner’s personal circumstances such as age, health, pre-existing medical conditions. However, as partners, you can come up with your own payment agreements.
What are the tax implications for partnership protection?
The tax treatment of partnership protection will depend on the way that the insurance has been arranged. The individual partner will pay premiums from their taxed income. If the partnership pays the premium, they will be taxed as a partnership business expense – unless the premiums are deducted from the partner’s capital, current or loan accounts.
There will be no Inheritance Tax payable on premiums, provided the arrangements are regarded as commercial, with no element of gift.