A partnership is not a legal entity but one or more of the partners can apply for a policy on the life of the key person.
The policy can be written into the key person Partnership trust if required.
The partnership pays the premium and you must apply the “Anderson Guidelines” (see earlier section for criteria). There is no tax relief on premiums for policies on the life of partners, but maybe available for policies on life of employees of the partnership.
The benefits (claim proceeds) will be treated as either a trading receipt or a capital receipt of the partnership, and will be taxed accordingly.
And what about LLPs?
An LLP is a legal entity and can own a policy just a limited company can. Key person is therefore written in the same way as for limited companies.
The “Anderson Guidelines” (see earlier section for criteria) must be applied but generally tax relief is available for key employees but not for LLP members.
Any claim proceeds are treated as a trading income of the LLP.