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HMRC internal manual

Lloyd's Manual

Inheritance tax: Names: valuation of the Lloyd’s interest: discounts

Various discounts are applied to both the value of open underwriting results and assets inFunds at Lloyd’s (FAL) and special reserve funds (SRFs). These discounts are inrecognition of the delay between death and the date pipeline profits are paid and thedates when FAL and SRF assets are released to the estate. The rates currently used fordiscounting purposes depend on whether the statutory audit basis is used or the actualbasis. Discounting factors are adopted using “Parry’s Tables”.

Statutory Audit Basis  
Deposits/Reserves 3.5% per annum*
Profits (discount tables) 6.0% per annum
Losses (discount tables) 4.0% per annum
Concessionary Actual Basis*  
Deposits/Reserves 3.5% per annum
Profits 12.0% per annum
Losses 12.0% per annum

*less the mean of yields on 2.5% consols and the FT All Share Index net of tax.