LLM8030 - Capital gains: Names: syndicate capacity: acquisition and disposal: incidental costs

Auction fees

Names pay fees to take part in capacity auctions, either as buyer or seller. Purchasers also pay a fee based on the cost of capacity purchased. Both these types of fees are allowable as incidental costs of acquisition or disposal that can be deducted from the gain.

Initial subscriptions

On joining Lloyd’s, an Entrance or Admission Fee is paid. When a Name resigns and finally disposes of all his syndicate capacity, this fee is regarded as an incidental cost of disposal of the capacity and may be deducted from the chargeable gain. The fee is also allowable as a capital loss if the Name simply allows capacity to lapse, rather than selling it. Like other incidental costs of disposal, the amount of the fee is not included in the relevant allowable expenditure for indexation purposes.