Lloyd’s of London has a history that stretches back nearly 350 years.

The majority of investors in today’s market operate through a corporate vehicle, and in the main this is through the use of a limited company (NameCo). There are still some members operating through a limited liability partnership (LLP), the original limited liability structure that was made available to members from the 2007 Year of Account. There are now only a few hundred members underwriting on an unlimited liability basis, compared to 34,000 in 1990.

Our Private Client team has been working with investors at Lloyd’s for more than 25 years and have a detailed understanding of the rules and nuances that apply to members’ tax. They can help guide you through the tax liabilities and reporting obligations.

Depending on which structure you have used, the tax treatment and reporting requirements will differ.

Taxation of a NameCo

With a NameCo, the profits are charged to Corporation Tax (CT) and a CT Return will be required. Individual members hold shares in the NameCo, and they receive income in the form of dividends, which may be charged to Income Tax. Depending on how the NameCo was financed, the member may receive repayments on loan account.

As and when a member wants to sell the NameCo, or gift shares to family members for example, we can calculate the Capital Gains Tax (CGT) position and provide advice around estate planning or tax mitigation.

Taxation of members of an LLP

For UK tax purposes, the LLP is looked through and the individual member is taxed on their share of the income and capital gains.

The LLP is required to file a partnership tax return and calculate each partner’s share of the profit, as well as their share of any capital proceeds.

The share of the profit is then reported on the individual’s Self Assessment tax return and taxed in the same way as self-employed income and is liable to Income Tax and National Insurance (NICs). We assist members to report their share of LLP income on their tax return and calculate the corresponding tax liability.

Taxation of unlimited names

Unlimited names are subject to Income Tax and NICs on the net profit from syndicate and non-syndicate income and expenses. Lloyd’s has a three-year period of account, and so syndicate income is taxed in the fourth year ie for the 2025 Account, this will run for three years from 1 January 2025 to 31 December 2027, and the result will be declared and taxed during the tax year 2028/29.

We can help you understand what will be taxed when, and also provide tax estimates for the purposes of reviewing the level of your tax payments on account for the following year.

Lloyd’s profits are specifically excluded from the change of basis period that became mandatory for businesses from April 2024. Lloyd’s results are therefore reported on a calendar year basis.

Syndicate capacity

If you underwrite on an unlimited basis, or through an LLP, then sales of syndicate capacity are chargeable to Capital Gains Tax (CGT) and we can calculate the capital gain arising, and any available costs.

We can also advise on any available reliefs such as Business Asset Disposal Relief (BADR) or rollover relief.

Funds at Lloyd’s

Funds at Lloyd’s (FAL) are required to support your underwriting. These are either held directly by the vehicle (NameCo), or by you personally, i.e. third-party funds (all LLPs and an option for NameCos).

The income arising on these funds is taxable, as are disposals of FAL assets. How that income or capital disposal is taxed will depend on who owns the funds.

We can advise you on your position and possible changes to your structure.

Estate planning

Lloyd’s investments can qualify for Inheritance Tax Business Property Relief (BPR).

We can help you with estate planning to ensure you maximise available reliefs, considering the long term IHT position as well as the Income Tax or CGT consequences of any transactions you may be considering.

I have an interest in a Lloyd’s LLP, which is currently worth £1.8M. Will I have to pay Inheritance Tax (IHT) when I die?

Lloyd’s assets, such as an interest in an LLP, qualify for Business Property Relief (BPR) for IHT purposes. If you were to die before 6 April 2026 then subject to any surplus funds, the whole interest would qualify for 100% BPR. This relief will reduce for deaths from 6 April 2026, when a £1M cap will come in on the 100% allowance. We talk more about this in our recent article on IHT and BPR {Link to IHT & BPR article}

Can I transfer some of my Lloyd’s interest to my children in my lifetime?

Yes – there will be some Lloyd’s administration required before the transfer can go ahead, particularly if your children are not currently investors at Lloyd’s in their own right. There will also be tax consequences of the gift, which is treated as a disposal for Capital Gains Tax (CGT) purposes and is a Potentially Exempt Transfer (PET) for IHT purposes. You should therefore take tax advice specific to your circumstances, before making such a transfer.

Is it correct that by investing in Lloyd’s my assets will be working twice as hard?

Whilst we are not permitted to provide investment advice, it is certainly the case that you remain entitled to the income and gains arising on assets that you deposit with Lloyd’s as your Funds at Lloyd’s (FAL). For example, if your FAL included UK Treasury Stock, you would still receive the interest paid, as you would if you held this asset outside of Lloyd’s.

However, that stock would be part of the FAL that is enabling you to participate at Lloyd’s, hopefully also generating a profit from Lloyd’s. Likewise, for shares held in your FAL, you would still receive any dividends paid.

The income from those investments would, however, form part of your Lloyd’s profit for tax purposes. This means that if you have an LLP, or unlimited underwriting, they will be taxed as trading profit, so will be liable to Income Tax and NICs, and chargeable at the standard tax rates, rather than lower dividend/savings rates.

I have shares in a Lloyd’s NameCo, but my agent has mentioned about investing further amounts in exchange for loan account. What are the tax implications?

From time to time you may want/need to increase your investment, by adding further funds to the NameCo. When you do this, you have options as to how this is treated. One option is to have the value of the additional funds allocated to a loan account. In due course, profits can be used to repay some or all of the loan and the repayment of loan will not be taxed on you as income.

However, loan accounts do not qualify for BPR and so, while you have a loan outstanding you have a potential exposure to IHT.

I am of advancing years, have shares in a NameCo, and my children are not interested in participating at Lloyd’s. Would it be more tax advantageous to sell the NameCo now?

There is a market for Lloyd’s NameCos, and so it is possible to sell it. You should speak to your Lloyd’s agent for information on the process. There may be CGT payable on the sale, and so you should seek tax advice before taking any action.

At least some of your NameCo interest would be covered by IHT BPR on your death. However, from the date of sale, the proceeds received lose that relief and so may fall within the IHT net. This will depend on whether you are a Long-Term UK Resident for IHT purposes, and if not, whether the proceeds have been paid offshore.

Therefore, although it may be simpler to sell in your lifetime, the IHT saving may be significantly greater if you hold it until your death. That will depend on whether you live long enough to give the cash away after the sale and then survive more than seven years from the date of the cash gift.

Tax is a complex area and the above Q & As are given as a simple guide only. You should always obtain specific advice that is relevant to your circumstances, before acting.

Lloyd’s investors