Tonnage tax offers solution for Lloyds

The insurance market is currently lobbying government for changes to its tax
regime, amid a wave of departures from the UK to lower-tax climates.

Leading Lloyd’s insurers Hiscox and Omega have both announced that they will
be leaving the market and basing themselves in Bermuda, where the rate of
corporation tax is 0%.

Tax experts believe one policy Lloyd’s is likely to push for is a regime
similar to the tonnage tax that applies to the shipping industry.

Deloitte corporate tax partner Bill Dodwell said a number of shipping
companies had left the UK for tax reasons, until the government introduced the
tonnage tax. The regime offered substantial tax relief to shipping groups that
kept a certain number of UK offices open and offered training programmes.

‘The government was effectively swapping tax revenues for the employment
offered by shipping companies. A similar system could work in the insurance
underwriting sector,’ said Dodwell.

Related reading