LLM5100 - Names: income from ancillary trust funds (‘ATFs’): dividends and scrip dividends: 6 April 1999 onwards

With effect from 6 April 1999, tax credits on dividends cannot be repaid. The tax credits are also ring-fenced, and can only be set against Lloyd's trade income. The ring-fencing arises from ITTOIA05/S397 (3).

Notional tax on scrip dividends that is included in Lloyd’s trade profits can only be offset against income tax due on those profits. If the tax due on Lloyd’s profits is less than the notional tax, any excess of notional tax cannot be offset against income tax due on other income for the year and neither is it repayable to the Name (ITTOIA05/S414 (2)). This also applied to notional tax on foreign income dividends, before their abolition in 1999.

If in the example in LLM5090, the Name’s trading profits included £1000 FID (including £200 notional tax) and the Name had Lloyd’s trading losses of £10,500 to bring forward from 2002-03, the 2003-04 Lloyd’s trading profits would be £500 and the computation would be: