UK’s tax regime has changed significantly since the likes of Hiscox, Catlin and Beazley left

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Following the news that the UK Treasury is trying to entice overseas-domiciled Lloyd’s (re)insurers to relocate their headquarters, GR has put together a list explaining why the country’s tax system could be beneficial for (re)insurers.

  • The main rate of corporation tax is 23% and heading down to 20% from 2015, the lowest rate of any major economy.
  • The UK has relatively generous group relief for current-period losses against profits of other companies in the corporate group – in effect, a form of fiscal consolidation.
  • There is no withholding tax on dividends paid by UK companies.
  • The UK has a wide network of double tax treaties (and also the EU interest and royalties directive) that can reduce or eliminate withholding tax on interest and royalties paid by UK companies.
  • The dividend exemption and substantial shareholding exemption together create a form of participation exemption – that is, in many cases, no tax for holding companies on the dividends they receive or capital gains that they realise from shareholdings in subsidiaries.
  • The optional branch profits exemption allows UK companies to operate business outside the UK without paying UK tax.
  • The UK still allows a generous and essentially uncapped deduction for interest and other finance costs.
  • There is an uncapped and unlimited carry forward of losses against future profits.