LLM8000 - Names: capital gains tax and inheritance tax

The guidance at LLM8010 onwards summarises the main capital gains tax (CGT) and inheritance tax (IHT) issues that affect individual members of Lloyd’s. Detailed guidance on CGT is to be found in the Capital Gains Manual (CG10200+) and on inheritance tax in the IHT Manual (IHTM01000+). The Capital Gains Manual contains some specific material on Lloyd’s at CG24000+. Links to these manuals can be found at LLM10000.

Individual partners in Scottish limited partnerships (SLPs – see LLM6060) and Limited Liability Partnerships (LLPs – see LLM6150) are subject to the same CGT and IHT rules that apply to individual Names.

For corporate members, the profits and gains from assets employed in, or in connection with their underwriting business are taxable under Case I of Schedule D ( LLM4050) and no CGT or IHT issues arise. Participators in such companies may be subject to CGT or IHT.

Capital gains issues after 1994 for individual Names mainly relate to the treatment of Lloyd’s syndicate capacity. Until 1993-94, syndicate chargeable gains were chargeable to CGT, but since 1994 they have been included in the Lloyd’s trading result and within the charge to income tax.

The material in this chapter deals with

• CGT on ‘bespoke’ syndicate capacity at LLM8010 onwards;
• CGT on Members’ Agent Pooling Arrangements (MAPAs) at LLM8110 onwards;
• CGT on other assets, mainly ancillary trust funds (ATFs) at ( LLM8170) and special reserve funds (SRFs) at ( LLM8180);
• the application of the various CGT reliefs at LLM8190 onwards (see LLM6160 for details of the ‘conversion reliefs’ that were introduced in FA 2004);
• the valuation of the Lloyd’s interest and business property relief for IHT at LLM8260 onwards.