Bermuda

UK could lose insurers to rival IFCs


By added on 27/01/2010

A rising tax burden could force more British insurers to relocate offshore, depriving the government of revenue just as it is struggling to rein in a soaring budget deficit, the industry's main lobby group said.

It is being reported on the Reuters  newswires that a rise in insurers' tax bill relative to the wider financial sector, coupled with a growing personal tax burden on their senior executives, could prompt more companies to quit the UK for rival financial centres, such as the Netherlands, Ireland and Hong Kong, the Association of British Insurers said on Tuesday.

"The real danger for UK plc is insurers deciding to locate away from the UK," said Peter Vipond, the ABI's Director of Financial Regulation.

"The UK cannot afford to stand still as other centres become more attractive."

London-listed property and casualty insurers Beazley and Brit Insurance both re-domiciled for tax purposes last year, shifting their headquarters to Ireland and the Netherlands respectively, while four other British insurers relocated to Bermuda between 2006 and 2008.

Brit said at the time that moving to the Netherlands would effectively halve its tax bill this year.

Increases in personal taxation unveiled last year, including a new 50 per cent top rate of income tax and a one-off 50 per cent tax on bank bonuses above £25,000 pounds, have stirred fears that financial services companies could move highly-paid staff to more fiscally friendly regimes.

Interdealer broker Tullett Prebon said last month that it would help relocate employees wishing to avoid rising British tax levels to its offices abroad.

Insurers paid 8.4 per cent less corporation tax in 2008/09, the ABI said, against a decline of 39 per cent for the financial services sector as a whole.