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Lloyd's inheritance tax
The Lloyd's Market Bulletin dated 8 May 2001 confirmed that, where an individual member of Lloyd's provides a bank guarantee as part of Funds At Lloyd's, 100 per cent business property relief is allowed up to the amount of the guarantee that is used or required as Fund At Lloyd's.
Lloyd's inheritance tax
The Lloyd's Market Bulletin dated 8 May 2001 confirmed that, where an individual member of Lloyd's provides a bank guarantee as part of Funds At Lloyd's, 100 per cent business property relief is allowed up to the amount of the guarantee that is used or required as Fund At Lloyd's.
The Inland Revenue has confirmed that the amount of business property relief will no longer be restricted by reference to the nature of the underlying asset or assets. This used to be the case if assets backing the guarantee were not used wholly or mainly for the purpose of the Lloyd's business, for example if a guarantee was secured on a main residence.
The Revenue will, however, treat the value of underlying assets as reduced by the amount of the guarantee for the purpose of giving any other reliefs or exemptions. This is illustrated in the following examples.
Example 1: Mr Needham
Mr Needham is an individual member of Lloyd's and a farmer. He has farmland (including property) worth £1 million and other assets valued at a net £1,250,000. The farmland qualifies for 100 per cent agricultural property relief.
He has a bank guarantee of £400,000 which is used in his Funds At Lloyd's. The bank guarantee is secured on the other assets.
On his death, the inheritance tax calculation is as follows. The valuation of the Lloyd's interest, which is covered by 100 per cent business property relief, is ignored for the purpose of this example, as are any other reliefs:
