Investing in Lloyd’s: A strategic opportunity in the post-Budget landscape

India Cornett
Business Development Manager

The UK has long been recognised as a hub for alternative investment, hosting vehicles such as the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) since the 1990s. Over time, alternative investments continued to establish their complementary role alongside traditional portfolios of cash, bonds, and shares, with holdings such as property and Alternative Investment Market (AIM) portfolios also becoming key tools for diversification and wealth planning.

Alternatives often come with attractive incentives such as upfront tax relief, tax free dividends, and exemptions from inheritance tax and capital gains tax. However, Reeves’ recent Budget has tightened the fiscal environment across a range of strategies:

Amid this tightening of reliefs, the government released a surprise softening on IHT policy.

Unexpectedly, the Chancellor announced significant changes to the BPR and APR threshold on 23^rd December 2025, declaring that from 6 April 2026, eligible wealth for 100% APR and BPR will rise from £1 million to £2.5 million per estate, with 50% relief applying above that amount.

Thanks to the transferability of this allowance, married couples or civil partners can shield up to £5 million in qualifying farming or business assets, in addition to existing nil-rate bands.

In the face of several challenges, investors are seeking alternatives that preserve flexibility, tax efficiency, and diversification.

One avenue that stands out in this new environment is the Lloyd’s of London insurance market. Here, private investors can benefit from a number of unique investment incentives by underwriting insurance risks through a portfolio of syndicates in a special purpose vehicle.

Investments such as stocks, shares, bonds, and other qualifying asset classes such as VCTs can be used to support participation in the Lloyd’s market. This enables investors to generate returns both from the investment portfolio underpinning Lloyd’s underwriting and from the underwriting activities themselves. Bank guarantees secured against property portfolios or land are also eligible. Collectively, the collateral is referred to as Funds at Lloyd’s (FAL).

Argenta’s clients have experienced a strong track record of success, achieving average annualised returns in excess of 13% over a 16-year period (as at 2024), with forecasts for 2025 projecting returns above 20%. Underwriting at Lloyd’s also serves as an effective portfolio diversification tool, as returns from (re)insurance typically have low correlation with traditional asset classes such as equities, property, or bonds.

In addition, a Lloyd’s investment qualifies for Business Relief. From 1 April 2026, 100% relief will apply to the first £2.5 million of combined business and agricultural property. For assets above this threshold, the relief reduces to 50%, making Lloyd’s participations an attractive option for succession planning. Depending on individual circumstances, investors may also benefit from Business Asset Disposal Relief and rollover relief.

Post Budget considerations

An investment vehicle at Lloyd’s can be structured either as a Limited Liability Partnership (LLP) or as a Limited Company (NameCo). Each structure has distinct advantages and should be chosen based on the investor’s objectives. As outlined earlier, investors use assets from their wider investment portfolios to support their underwriting commitments. 

It is important to note that while dividends from shares held personally are taxable, where the Funds at Lloyd’s are held within the NameCo, realised and unrealised gains and losses are taxed to corporation tax, whilst dividends received within a NameCo are generally tax-free. These dividends can then be distributed to shareholders or reinvested in Lloyd’s, allowing investors to structure their participation efficiently within their broader investment strategy. Interest payments from bond holdings are treated non-trading income and therefore is subject to the main rates of UK corporation tax.  

This flexibility illustrates how an investment in Lloyd’s can complement a diversified portfolio while offering unique benefits in both return potential and tax efficiency.

For more information on investing in Lloyd’s, or to explore structuring options as an existing investor, please Contact Us.