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AIA

Finance Bill 2012: Lloyd’s stop-loss insurance

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7th Dec 2011
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Insurance premiums incurred by members of Lloyd’s of London insurance market can no longer be deducted before profits from the reinsured underwriting business are taxed, the government has announced.

The change, introduced on 6 December, will increase tax receipts by about £200m a year, HMRC said in a statement.

Stop-loss insurance is a type of re-insurance contract which can be used by members of Lloyd's to insure against exposure to risk. This is in addition to insurance taken out at Lloyd's syndicate level.

The premiums incurred by Lloyd's corporate bodies for stop-loss insurance taken out at member-level will be taxed on a ‘declaration’ basis rather than annually under previous rules.

The declaration tax rule, which is specific to Lloyd's, allows the recognition of the profit or loss coming from from the corporate body's syndicate membership to be deferred for four years for tax purposes.

The change to tax rules on the insurance premiums was first announced at Budget 2011. The government said it has held “informal consultations” with Lloyd's and interested parties.

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