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HMRC internal manual

Lloyd's Manual

HM Revenue & Customs
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Names: special reserve funds: background

Since the late 1940s Names have been allowed to maintain reserves, built up from profits in good years, to meet losses in bad years, called special reserve funds. The original fund was replaced by a new style special reserve fund following legislation introduced in FA93/SCH20. From 2000, it has been referred to simply as a special reserve fund (SRF).

Broadly FA93 provides for a fund which a Name may (but is not required to) set up, into which a transfer of cash may be made in profitable underwriting years, and from which mandatory withdrawals must be made in years when there are losses or cash calls.

There are no provisions for special reserve funds for corporate members of Lloyd’s. In this context that includes not only Namecos but also LLP and SLP members - only unlimited liability members, the traditional Names, may benefit. Neither may partners in LLP or SLP members make transfers or withdrawals based on their profits or losses from the partnership.


When a Name opens an SRF, they sign a trust deed which establishes a beneficial trust of which the Society of Lloyd’s is the sole trustee. Lloyd’s Members’ Funds Department is responsible for the administration of all SRFs, which includes computing movements within each fund and managing and controlling the records of funds held.

Transfers into and out of the fund must be made in cash from the premium trust fund, except where assets were transferred to a new fund from an old, and when withdrawals are made on cessation (LLM5320).

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SRF ‘Arrangements’

The SRF legislation provides for HMRC to agree operating arrangements that Lloyd’s will apply when administering the funds. These arrangements are formalised in the SRF Manual produced by Lloyd’s. The SRF Manual sets out the administrative arrangements necessary to effect the statutory provisions in FA93/SCH20 and the SRF regulations. The Manual details the responsibilities, authority and accountability of Lloyd’s and the Names in operating the SRF.

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Taxation Advice and Audit

The aggregate transfer into or out of a Name’s SRF is reported to the Name by Lloyd’s Members Services on the syndicate taxation advice, form CTA1, for the appropriate year of account. HMRC’s Internal Audit team reviews the controls and management of the system to ensure the figures provided by Lloyd’s MSU are accurate and comply with the requirements of the legislation.

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Annual valuation

The SRF is valued annually at 31 December (or the last business day before) (FA93/SCH20/PARA6) by the Lloyd’s Members’ Fund Department. A copy of the valuation, listing all assets held and their relevant prices and values is sent to members’ agents.