View more on these topics

Insurers face hit from US tax rules

The Association of British Insurers is fighting for UK insurers to be excluded from tax evasion laws currently being drafted in the US which could cost UK insurers millions of pounds if forced to comply.

Under the Foreign Account Tax Compliance Act passed in the US in March insurers, banks, fund managers and hedge funds will have to go through their existing client bank and hand over the details of US citizens with at least £32,000 of assets.

Systems will also have to be adapted to collect the data for new customers.

The US Treasury is currently drafting guidance about how this act will be implemented.

But the ABI says UK insurance policies and savings products present little or no risk to the US in terms of tax evasion, as less than 0.1 per cent of UK insurance customers are US residents.

The trade body has now submitted its response to the US Treasury calling for UK insurers to be excluded where they sell ’low risk’ policies where there is no investment element, where the plans are taxed in the home jurisdiction of the insurance company, or where plans are designed to provide benefits in retirement or on death if earlier.

For policies that do not meet this criteria and therefore still subject to the US laws the ABI says: “At present the policyholder data held, systems development limitations and the timing of the commencement would make it impossible for UK insurers to be able to fully comply with the FATCA requirements in respect of such policies.”

The ABI adds that any system changes should be timed to take into account of the implementation of Solvency II, with the rules coming into effect at the end of 2012.

ABI director of financial regulation and taxation Peter Vipond says: “We understand the motives and importance of this initiative to the US. However, UK insurers represent no significant risk to US tax revenues and we are keen to avoid unnecessary and onerous costs on the industry that will ultimately be borne by all policyholders.

“We will be liaising closely with the US authorities to find a way of meeting their requirements without damaging commercial relations between the UK and the US.”

Recommended

Prestwood launches financial planner mentoring programme

Prestwood Group, the company behind Truth and Prestwood Software, has launched a coaching and mentoring programme to help financial planners transition their business ahead of the retail distribution review. The programme is spread over four to six months and includes tutorials and practical support. It is led by a team of eight mentors based across […]

Faltering start for Bolton’s China fund

Anthony Bolton’s Fidelity China special situations fund lagged its MSCI benchmark over its debut two months in net asset value terms, although its share price outperformed. From the launch of the fund on April 19 to June 30, the investment trust saw its NAV fall by 5.38 per cent while the share price declined by […]

6

Co-op may sell life arm in Britannia integration

Co-operative Financial Services could look to sell off its life insurance arm as part of its integration with Britannia Building Society. Its life and health insurance arm has assets worth around £18bn, with a focus on pension and protection business. In July, Money Marketing revealed the Co-op was looking to offload its IFA arm, Co-operative […]

S&P downgrades Ireland

Standard & Poor’s has downgraded the Irish Republic to its lowest sovereign rating in 15 years. S&P has cut the rating one step from AA to AA-, its lowest since 1995, having cited the fact that costs continued to rise as the country looked to boost its troubled banking sector. The ratings agency believes the […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

Leave a comment