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More info on Business Protection Insurances?

More info on Business Protection Insurances?

I am looking to find out more information on business protection insurances and the tax treatment of these.

Has anyone came across any reading materials / books on the subject of Key Man, Stakeholder protection and life assurances policies undertaken by owner managed businesses?


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16th May 2011 15:12

Taxation magazine

Do you subscribe to Taxation magazine?  There was an article called "Key People" (Vol 167, Issue 4303) which considers precisely these matters.

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By blok
19th May 2011 12:26


Yes, have had a look at this and what is clear is that the whole subject is very unclear.

Typical scenrio I have is that two man limited company, no relation between the directors.  They both own 50% of the shares each.

The company takes out a policy to insure the loss (critical illness/death) of one of the directors.  In the event of a claim the company will receive proceeds from the insurer and the company will be in funds to find a replacement.  Fair enough.

The premiums are not deductable because the have a duality of purpose, they are not W&E for the benefit of the trade, due to the fact that they as a consequence add value to the shareholders funds.

In addition the proceeds from a claim may be taxable because the money is clearly not capital in nature and stems from the company insuring a revenue producing employee.

Would that be a fair assessment of Key Man in this occasion?  Or am I being unduly pessimistic?


If the key man policy was to satisfy the bank who were providing funds to allow the company to borrow for a capital project then the premiums would be capital and the proceeds would be capital and exempt under s210 TCGA92? 

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19th May 2011 15:11


Not pessimistic, your summary seems fair.  I see where you're going on the capital point.  I wouldn't like to have to argue the point with HMRC.  But in theory seems correct?

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