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Edward Lloyd opened a coffee house in Tower Street, London in 1687 which was frequented by ship owners, cargo owners, ships captains, and other businessmen who were prepared to share the risks of commercial ventures.
He gave his name to the institution we now know as Lloyds. The practice of calling members "Names" or "Underwriters" evolved over the years from these risk takers being prepared to sign their names at the end of a document setting out the details of the transaction.
Without modern communications it took up to three years to know if a long voyage had been successful or whether there was a liability to pay for the risk and so the three year accounting process was developed. Lloyds accounts are based on the calendar year, but the 1999 year was not closed until 31 December 2002 (even then with a reinsurance to close premium for outstanding claims), and so the results cannot be established until 2003 and form the basis of the 2002/03 tax liability, reported on Names 2003 Tax Returns.
The number of individual names at Lloyds is now less than 10% of its peak, but many former names are still involved with Lloyds as "small successor members", corporate members with limited liability, having taken the interavailability conversion route.
An External Name delegates the everyday control of his Lloyd's affairs to one or more members' agents, but is treated for tax purposes are running a business, which may qualify for business asset taper relief for Capital Gains Tax and business property relief for Inheritance Tax.
We can advise on the unique tax opportunities available to Lloyds names and the Special Reserve Fund. We can remind those names who were underwriting in the 1971 account and earlier that they have been taxed twice and will be due 1972 profit relief and time apportionment relief under what is now known as Regulation 13 when they leave the market.
We can assist with the completion of Lloyds Self Assessment Returns, which will normally be processed at the West Yorkshire Personal Tax Unit, and the associated tax calculations, but we cannot predict which will be the profitable years for the insurance market.
Lloyds publish information about members tax at www.lloyds.com/taxation.
HMRC has published a revised manual on the tax treatment of Lloyd's syndicates and members at www.hmrc.gov.uk/manuals/llmanual/index.htm.
Reminder - disclaimer applies. Please feedback your comments. This page was last modified 6 June 2006.