IR12

9 March 1999

CAPITAL GAINS TAX SIMPLIFICATION

LLOYD'S SYNDICATE CAPACITY

Two measures to cut the compliance burden on individual members of
Lloyd's were announced by the Chancellor today. These changes to the
capital gains tax rules, which will be introduced from 6 April 1999,
significantly reduce the complexity of the calculations and allow the
tax charge to be deferred.

DETAILS

1. Members can participate in syndicates directly or through an
arrangement known as a "Members' Agent Pooling Arrangement" (MAPA)
which allows the member to buy into a pre-selected portfolio of
syndicates.

2. The first proposal will allow a member who joins a MAPA to treat
his share of the various syndicate capacities held through the MAPA
as if it were a single direct holding of syndicate capacity. This
will substantially reduce the number of CGT computations that would
otherwise be needed whenever the MAPA manager buys and sells
syndicate capacity or when other members join or leave the MAPA.

3. Secondly all syndicate capacity whether held directly or through a
MAPA will be eligible for CGT roll-over relief. This will apply in
relation to acquisitions or disposals of syndicate capacity on or
after 6 April 1999.

4. Only individual members of Lloyd's and individuals who are
partners in a Scottish Limited Partnership which is itself a Lloyd's
member will benefit from these deregulatory proposals. Different
rules apply to corporate members of Lloyd's.

NOTES FOR EDITORS

1. Members of Lloyd's underwrite insurance risk by means of
participation in syndicates. A syndicate is run by a managing agent
who accepts insurance risks on behalf of all members of the
syndicate. Each syndicate member has the right to remain on the
syndicate for the following year. This right is known as syndicate
capacity.

2. MAPAs have been in existence at Lloyd's since 1994. A MAPA allows
a member access to a wide range of syndicates with the aim of
ensuring a well balanced portfolio of risk. Most individual members
now write insurance either wholly or partly through a MAPA rather
than solely through direct participation in individual syndicates.

3. In 1995 Lloyd's changed its rules to allow syndicate capacity to
be bought and sold for the first time. This enabled Lloyd's members
to realise capital gains and losses on their disposals of syndicate
capacity.

4. Changes in the portfolio offered by a MAPA or to the membership of
the MAPA lead to many small capital gains or losses for each MAPA
member. The Inland Revenue have agreed an administrative practice
with Lloyd's to defer most of these small gains and losses until the
time that the member leaves the MAPA. The Chancellor's proposal will
legislate this existing practice.

5. Roll-over relief allows a trader to defer a capital gain arising
on the disposal of a business asset, as long as he/she reinvests the
proceeds of the sale in another business asset.

INLAND REVENUE PRESS OFFICE 

Media enquiries to:           0171 438 6692/6706/7327 
(Out of hours: 0860 359544) 
Non-media enquiries to:       0171 438 6420/6425 (Office hours only) 
Inland Revenue information is
on the Internet: www.inlandrevenue.gov.uk

# = pounds sterling