LLM8170 - Capital gains: Names: ancillary trust funds

Names maintain a number of different types of trust funds to hold assets used to back their underwriting at Lloyd’s. These are referred to in the tax legislation as ancillary trust funds (ATFs - LLM1200). Special reserve funds ( LLM8180) and premium trust funds are not included.

Disposals of ATF assets

Disposal proceeds and acquisition costs of ATF assets of individual Names are excluded from the trading income computation by FA93/S176.

A Name is assessable personally on any gains arising from the disposal of assets which form part of their ATFs. This is because the Name is absolutely entitled as against the trustees to the investments in any ATFs in which the Name has an interest.

Transfers between personal portfolios and ATFs

There is no distinction between assets held in a Name's ATFs and a Name's personal holding of assets. This means that a transfer of assets between personal holdings and an ATF is not treated as a disposal.

Any shares acquired after 31 March 1982, but before 6 April 1998, and held in an ATF were pooled with any similar shares held in a personal capacity. From 6 April 1998, the pooling provisions have been modified, and taxpayers can have different holdings of shares of the same class in the same company. See CG50572 for acquisitions on or after 6 April 1998, and CG50590+ for acquisitions before that date. (Link to CG Manual LLM10000)

No distinction is made between a Name's personal holdings and securities held in ATFs when applying identification rules.

Third party deposits

Lloyd's will accept a deposit on behalf of a Name made by a third party, for example a spouse or a company. The tax office dealing with the beneficial owner is responsible for dealing with any capital gains or losses.

SLPs, LLPs and ATF assets

Dealt with at LLM6120.