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HMRC internal manual

Lloyd's Manual

Syndicate accounts: taxation: premium trust fund assets: investment income

Syndicate investment income

Until the changes made to dividend income by FA09/SCH14, investment income received by the syndicate was taxed as trading income irrespective of its nature. For individual members, this is by virtue of FA93/S171 and for corporate members was by virtue of FA94/S219.

This approach was designed to bring consistent treatment within a mixed (corporate and individual member) syndicate, but left corporate members in a somewhat anomalous position in relation to general insurance companies, who (unlike other ‘dealing companies’) were and are exempt from tax on dividends from UK companies - see GIM5000+. With the introduction of the exemption for foreign dividends, the charge on corporate members’ UK dividends received was also removed.

Syndicate dividends: individual members

Dividends, UK or foreign, form part of trading income by virtue of FA93/S171. Subsection (2B) prevents any entitlement to tax credits on equities held in a premium trust fund. The charge is on the dividend amount.

Syndicate dividends: corporate members

Most dividends and other distributions received on or after 1 July 2009, including foreign dividends, are exempt. The charge on UK premium trust fund dividends received by Lloyd’s corporate members, FA94/S219 (4), was repealed by FA09/SCH14/PARA18