LLM7030 - Double taxation relief: individual Names: Regulations
The Lloyd’s Underwriters (Double Taxation Relief) Regulations 1997
For 1996-97 and later years, the rules set out in the
Lloyd’s Underwriters (Double Taxation Relief) Regulations
1997 (SI1997/405) provide a simplified regime to enable individual
Names to cope with the complexities of claiming relief for foreign
tax suffered on Lloyd’s income. These rules also apply to
non-corporate partners in SLP and LLP members of Lloyd’s, but
not to DTR for corporate (limited company) members of Lloyd’s
(see
LLM7100), or corporate partners in
partnership members of Lloyd’s.
Under these rules profits from membership of Lloyd’s
are regarded as a single item of foreign income and all foreign tax
paid on that income is treated as foreign tax on that single item
of foreign income.
Pooling
The main feature of the Regulations is the creation of two pools
for DTR purposes, one of foreign tax and one of Lloyd’s
income. Instead of looking at the profits arising in each overseas
country and computing DTR for the tax paid in that country, all
foreign tax paid on Lloyd’s income is lumped together in one
pool and available for DTR against UK income tax on the full amount
of Lloyd’s profits for the year, regardless of the country in
which the profits arose. The pooling rules also cater for
additional payments of foreign tax related to earlier years (
LLM7060).
Names can claim relief for the full amount of the foreign tax
in the pool, either by deduction from Lloyd’s profits, or,
where available, as tax credit relief against UK tax on
Lloyd’s profits. But the pool of each Name is indivisible so
a Name may not claim relief for one part by deduction and the
balance as tax credit relief.
Allocation of foreign tax to tax years
The Regulations prescribe to which years Lloyd’s foreign tax pool particular types of foreign tax are allocated ( LLM7040). This is because Lloyd’s related profits are chargeable in different ways and at different times in most foreign jurisdictions compared to the UK. For instance, in the USA, the taxable profits of 2005 would include profit from business written in the 2003, 2004 and 2005 accounts.
