Corporation tax on dividends scrapped

The Lloyd’s insurance market will no longer pay corporation tax on dividends and other distributions received from UK companies.

The decision announced in today's Budget means the market has been brought into line with general insurers. It will begin in on 1 July.

The corporation tax on dividends will be repealed in the Finance Bill 2009.

Luke Savage, Lloyd's finance director, said: "We welcome news that the Government will introduce tax relief for claims equalisation reserves for Lloyd's corporate members.

"Also welcome was the announcement of a tax exemption for UK dividends received by Lloyd's corporate members. Both these bring Lloyd's members in line with other general insurers and go some way to ensuring that Lloyd's corporate members can continue to compete globally. There is more which could be done but we are encouraged by Government's response so far."