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HMRC internal manual

Lloyd's Manual

Capital gains: Names: ancillary trust funds

Names maintain a number of different types of trust funds to hold assets used to backtheir underwriting at Lloyd’s. These are referred to in the tax legislation asancillary trust funds (ATFs - LLM1200). Special reserve funds (LLM8180) and premium trust funds are not included.

Disposals of ATF assets

Disposal proceeds and acquisition costs of ATF assets of individual Names are excludedfrom the trading income computation by FA93/S176.

A Name is assessable personally on any gains arising from the disposal of assets whichform part of their ATFs. This is because the Name is absolutely entitled as against thetrustees to the investments in any ATFs in which the Name has an interest.

Transfers between personal portfolios and ATFs

There is no distinction between assets held in a Name’s ATFs and a Name’s personalholding of assets. This means that a transfer of assets between personal holdings and anATF is not treated as a disposal.

Any shares acquired after 31 March 1982, but before 6 April 1998, and held in an ATF werepooled with any similar shares held in a personal capacity. From 6 April 1998, the poolingprovisions have been modified, and taxpayers can have different holdings of shares of thesame class in the same company. See CG50572 for acquisitions on or after 6 April 1998, andCG50590+ for acquisitions before that date. (Link to CG Manual LLM10000)

No distinction is made between a Name’s personal holdings and securities held in ATFs whenapplying identification rules.

Third party deposits

Lloyd’s will accept a deposit on behalf of a Name made by a third party, for example aspouse or a company. The tax office dealing with the beneficial owner is responsible fordealing with any capital gains or losses.

SLPs, LLPs and ATF assets

Dealt with at LLM6120.