UK captive roundtable clarifies on tax and redomestication
HM Treasury and the Prudential Regulation Authority (PRA) have clarified some queries around tax rules and the redomestication process for prospective captives setting up in the UK.
The issues had been queried by the industry following the release of the draft proposed UK captive framework in July by the PRA and Financial Conduct Authority (FCA). The final captive framework is planned to be put into place by next year.
Minutes from the PRA-hosted roundtable held on 17 September with industry stakeholders and members of HM Treasury gave some answers.
On the redomestication process, HM Treasury clarified that the UK does not currently have a corporate re-domiciliation regime and that any future cross-sector framework would require legislation.
Following further questioning by participants, the PRA explained that existing mechanisms, including novations and commutations, and potentially other solutions, could support some transitions in the meantime.
The PRA also noted that questions on tax had been submitted in advance of the roundtable and invited HM Treasury to respond. Questions sought clarity on the tax treatment of UK captives and any related government or HMRC work or direction of travel.
In response HM Treasury explained that the government is not anticipating to provide tax incentives for captives under the current proposals and that captives would be taxed in the same manner as other insurance undertakings.
Participants raised potential implications for charities, not-for-profit organisations and smaller organisations, as well as the possible impact of insurance premium tax on captive adoption.
HM Treasury also noted that the tax treatment of future captive PCC structures would require further consideration if that framework were taken forward.
The PRA has previously claimed it would work towards PCC legislation shortly after the captive framework is put in place, although other legislation is required before this can be put in place.
HM Treasury provided an update during the roundtable on the legislative work required to enable PCCs to undertake insurance activity. It said timing would depend on that legislative process, after which further regulatory consultation and policy development would be required.
The discussion at the roundtable was separate to an ongoing consultation seeking responses on the proposed framework.
Stakeholders wishing to respond should do so formally through the relevant PRA and FCA consultations, CP11_26@bankofengland.co.uk and captives@fca.org.uk, by 14 October 2026.
Respondents were encouraged to provide practical examples, supporting evidence and information about unintended barriers or areas where the regime could operate more effectively.
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