Members underwrite for one year of account at a time. When a Member decides to resign from Lloyd’s, he or she can sell their limited liability vehicle outright. The proceeds arising from this sale will be treated in accordance with the prevailing tax legislation. The valuation of the vehicle will include the “pipeline” profits from the open years of underwriting and the value of the syndicate capacity contained within the vehicle. Once the purchaser has introduced their own capital into the vehicle, the capital of the existing Member can be released.
As an alternative, Members can sell the syndicate capacity contained in their limited liability vehicle at the capacity auctions. The profits emanating from an LLP sale of capacity will normally be liable for capital gains tax at the prevailing rate and subject to the normal allowances, and for a NameCo to corporation tax. Under current circumstances, the proceeds from the sale of capacity are available for Entrepreneurs’ Tax Relief.
However, as a result of the fact that Lloyd’s syndicates operate a three year accounting system, the Members’ FAL must remain in place until their syndicates have closed all of their open years by way of the standard reinsurance to close process.
We publish details of underwriting vehicles for sale here.