Fidentia Services LLP provides an administrative service for Namecos and Limited Liability partnerships (LLPs) underwriting at Lloyd's

Investment options

Fidentia Services LLP provides an administrative service for Namecos and Limited Liability partnerships (LLPs) underwriting at Lloyd’s.

 

Contact us

Namecos

  • A single individual or a group can participate in a Nameco.
  • A Nameco provides capital to support its underwriting which is lodged at Lloyd’s as funds at Lloyd’s (FAL). The level of FAL required is determined by (a) the overall capacity underwritten by the Nameco and (b) the Nameco’s economic capital assessment ratio which is set by Lloyd’s. Most new and converting Namecos are required to deposit FAL equivalent to a capital ratio of 40% of their overall underwriting capacity, subject to a minimum capital requirement. This capital ratio will increase over subsequent years as the Nameco’s FAL is used also to support additional years of account.
  • The minimum capital requirement for a new-money Nameco is £350,000 or 40% of the premium income limit whichever is the higher. The minimum capital requirement for a single unlimited member converting to a Nameco is £100,000.
  • Namecos can be set up new, or can be purchased from existing owners, subject to availability.
  • Namecos are liable to pay corporation tax on any profits or capital gains realised during an accounting period at the normal corporation tax rates.
  • The Nameco can choose to retain its underwriting profits, or pay some or all of them out as dividends or salary. In each tax year, an individual is entitled to a £2,000 tax-free allowance on their dividend income. If dividends received in a tax year are less than £2,000, the income will not be liable to income tax. However, where dividends received exceed £2,000, the excess income above the £2,000 will be taxed at the dividend income tax rates of 7.5%/32.5%/38.1% for basic rate, higher rate and additional rate taxpayers respectively.
  • Losses sustained by the underwriting activities of the Nameco can be carried back for one year or carried forward and offset against future profits of the company. They cannot be relieved against non-Lloyd’s income of the shareholders. However, in the March 2021 budget, it was announced that Namecos which make losses during the years ended 31 December 2020 and 31 December 2021 will be able to carry back these losses 3 years rather than just one year, against profits made in the later years first.
  • Ownership of the Nameco can be bequeathed on death so that the company can continue to underwrite at Lloyd’s.
  • If the owner of the Nameco wishes to resign from the market, then the entire company can be sold, subject to demand. The potential price of such a sale would include the value of the syndicate capacity and a proportion of the pipeline profits.
  • When a Nameco ceases to underwrite, Lloyd’s requires the company to remain in existence as a dormant entity. If this stage is reached, then Fidentia are able to arrange this administrative service for a one-off fixed fee at the time.
  • Business Asset Disposal Relief may be available to shareholders on the sale of their entire stake in a Nameco. Please see tax section for more information regarding disposals.
  • Shares in a Nameco can be gifted and bequeathed. Holdover relief for gains may be available on gifts.
  • Lloyd’s will charge an application fee to set up a Nameco. For applications made during 2021, the fee will be £5,250 if it is classed by Lloyd’s as a simple structure and £10,500 if classed as a complex structure. We will clarify the cost for you once we have examined your proposed structure. Lloyd’s will apply a 10% discount where an unlimited member converts or an existing member sets up a new Nameco provided there are no additional applicants unknown to Lloyd’s. Lloyd’s will also charge fees where the application includes a third party funds at Lloyd’s owner, the fee will depend on the complexity of the structure of the third party. The Lloyd’s fee to set up a Nameco with non-private capital will be £52,000. Members’ agents also charge fees for new applications.

LLPs

  • LLPs were introduced for the 2007 account, so that individuals could underwrite at Lloyd’s within an English Limited Liability Partnership.
  • A single individual or a group can form a LLP.
  • A LLP provides capital to support its underwriting which is lodged at Lloyd’s as funds at Lloyd’s (FAL). The level of FAL required is determined by (a) the overall capacity underwritten by the LLP and (b) the LLP’s economic capital assessment ratio which is set by Lloyd’s. Most new and converting LLPs are required to deposit FAL equivalent to a capital ratio of 40% of their overall underwriting capacity, subject to a minimum capital requirement. This capital ratio will increase over subsequent years as the LLP’s FAL is used also to support additional years of account.
  • The minimum capital requirement for a new-money LLP is £350,000 or 40% of the premium income limit whichever is the higher, with each individual member in the LLP providing a percentage share in accordance with the member’s percentage loss share in the LLP.
  • Underwriting profits are deemed to be earned income and are taxed as such. Earnings from the LLP are pensionable subject to any maximum contribution levels which may appertain to an individual’s circumstances at the time and are dealt with and taxed at individual partner level and not at LLP level.
  • A partner’s trading losses can be offset against a partner’s share of gains and future profits made by the LLP, or against his/her other income in the current or previous tax year. However, in the March 2021 budget, it was announced that for LLPs which make losses during the years ended 31 December 2020 and 31 December 2021, the members will be able to carry back their trading losses 3 years against both their trading profits and other income of previous tax years, with the later years offset first.
  • If a partner wishes to resign from the LLP, the share is first offered to the other underwriting partners. If all underwriting partners wish to cease involvement then the LLP may be sold to a third party, subject to demand. Alternatively, the capacity can be sold at auction and the LLP liquidated with cash from realised assets and pipeline profits, as they are paid out by Lloyd’s, being distributed to the partners.
  • When a LLP ceases to underwrite, Lloyd’s requires it to remain in existence as a dormant entity. If this stage is reached, then Fidentia are able to arrange this administrative service for a one-off fixed fee at the time.
  • 100% Business Property Relief is available on a partner’s share of the underwriting capital and assets of a LLP after 2 years of trading. This reduces the inheritance tax liability on a partner’s estate.
  • When a partner disposes of the entire interest in a LLP, Business Asset Disposal Relief may be available. Please see the tax section for more information.
  • Lloyd’s will charge an application fee to set up a LLP. For applications made during 2021, the fee will be £5,250 if it is classed by Lloyd’s as a simple structure and £10,500 if classed as a complex structure. We will clarify the cost for you once we have examined your proposed structure. Lloyd’s will apply a 10% discount where an unlimited member converts or an existing member sets up a new LLP provided there are no additional applicants unknown to Lloyd’s. Lloyd’s will also charge fees where the application includes a third party funds at Lloyd’s owner, the fee will depend on the complexity of the structure of the third party. The Lloyd’s fee to set up a LLP with non-private capital will be £52,000. Members’ agents also charge fees for new applications.
Contact us