Ernst & Young has applauded the general insurance provisions in the Chancellor's pre-Budget report.
In what is widely expected to be Gordon Brown's last pre-Budget report as Chancellor, he announced plans to repeal tax rules for the discounting of insurance reserves and clarify business transfers for Lloyd's reconstructions.
Ernst & Young insurance tax partner David Arnold said: "Today's measures simplify the current tax regime for insurance companies and go a long way to helping ensure the competitiveness of the UK insurance industry. Ernst & Young objected to earlier proposals for the tax treatment of general insurance reserves and called for their repeal earlier in the year.
"Today's announcement, which takes effect for accounting periods ending on or after the Finance Bill 2007 receiving Royal Assent, shows that the tax collector and the tax payer can work closely together in a sensible way for mutual benefit and come up with a suitable solution. Ernst & Young looks forward to further contributing to this important consultation."
Arnold added in regard to Lloyd's processes: "Lloyd's corporate members will now be able to consolidate businesses with tax certainty and achieve economies of scale within their group."
