LLM8260 - Inheritance tax: Names: introduction

The following paragraphs outline the main inheritance tax issues affecting individual members of Lloyd’s. For more detailed guidance on inheritance tax see the Inheritance Tax Manual – IHTM01000 ( LLM10000).

Inheritance tax is charged on the total value of a deceased person’s estate at death, and this will include the whole of the Lloyd’s interests of a deceased Name. The interests include assets held to back the underwriting as well as the underwriting profits of open accounts and accounts that are running off. A UK domiciled member is liable to IHT on worldwide assets; a non-UK domiciled member on assets situated in the UK.

Interest in the underwriting business

There are three distinct elements to the Lloyd’s interest

• the pipeline results of the open years of account together with the result of any closed year of account not distributed before death (open year run-off accounts also have to be valued)
• the value of assets held in a special reserve fund (see LLM5230) and in ancillary trust funds ( LLM1200)
• the value of syndicate capacity.

LLM8270 and LLM8280 deal with valuation issues relating to IHT.

Business property relief (BPR)

The ten yearly instalment method of paying any resulting inheritance tax is available for IHT due on the value of business assets, whether or not they rank for business property relief. LLM8290 deals with business property relief.

Administration

IHT issues relating to Lloyd’s are dealt with by one of the Valuation Groups in Shares and Assets Valuation in Nottingham.