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HMRC internal manual

Lloyd's Manual

Equalisation reserves for corporate and partnership members: scope of relief

The relief is available to corporate and partnership members of the Lloyd’s insurance market. It applies to both large corporates and to private capital invested through a Nameco small company vehicle. It also applies to LLP and SLP members of Lloyd’s, and consequently for the benefit of members of the limited partnerships including individuals. It thus applies to all limited liability capital providers, but it does not apply to traditional unlimited liability Names who belong directly to Lloyd’s. This is because these Names may establish special reserve funds (LLM5230) which offer advantages similar to or better than equalisation reserves.

The Lloyd’s Underwriters (Equalisation Reserves) (Tax) Regulations (SI2009/2039) refer to ‘accounting periods’. This is appropriate for both corporate members of Lloyd’s and partnerships whose members include individuals - see the Lloyd’s Underwriters (Partnerships) (Tax) Regulations 1997, SI1997/2681 (as amended). Regulation 6(1) provides that references to the ‘corresponding underwriting year’, being the underwriting year ending in the tax year of assessment for individuals (FA93/S184 (2)(a)), are to be taken to be references to the (partnership) accounting period, as defined by regulation 6(2), ending in the corresponding underwriting year.