Lloyds TSB Bank plc

TAXATIONThe following discussion is a summary of the current taxation treatment of the Capital Securities andcertain tax matters arising under UK tax law. The discussion does not purport to be a comprehensivedescription of all tax considerations which may be relevant to a decision to purchase Capital Securities. Thediscussion is based on the tax laws of the United Kingdom as in effect on the date of this Offering Circular,which are subject to change, possibly with retroactive effect. The discussion does not consider any specificfacts or circumstances that may apply to a particular Capital Security Holder. Capital Security Holders whoare in any doubt as to their tax position or who may be subject to tax in a jurisdiction other than thosediscussed should consult their professional advisers.United Kingdom TaxationFor so long as the Capital Securities continue to be listed on a "recognised stock exchange" within themeaning of section 841 of the Income and Corporation Taxes Act 1988 ("ICTA"), payments of intereston the Capital Securities may be made without withholding or deduction for or on account of UnitedKingdom tax.Persons in the United Kingdom paying interest to or receiving interest on behalf of another person maybe required to provide certain information to the United Kingdom Inland Revenue regarding the identityof the payee or person entitled to the interest and, in certain circumstances, such information may beprovided to the tax authorities in other countries.If the Capital Securities cease to be listed on a "recognised stock exchange", interest will generally bepaid under deduction of income tax at the lower rate (currently 20 per cent.), subject to any direction tothe contrary from the Inland Revenue in respect of such relief as may be available pursuant to theprovisions of any applicable double taxation treaty.The interest on the Capital Securities will have a United Kingdom source and, accordingly, subject as setout below, may be chargeable to United Kingdom income tax by direct assessment even if paid withoutwithholding or deduction. The profit realised on any disposal (which includes redemption) of any CapitalSecurity issued at an issue price of less than the amount payable on redemption is similarly chargeablebut does not attract United Kingdom withholding. However, neither such profit nor interest receivedwithout deduction or withholding is chargeable to United Kingdom tax in the hands of a CapitalSecurity Holder who is not resident for tax purposes in the United Kingdom unless the Capital SecurityHolder carries on a trade, profession or vocation in the United Kingdom through a branch or agency inthe United Kingdom in connection with which the interest or profit is received or to which the CapitalSecurities are attributable. There are certain exceptions for income received by specified categories ofagent (such as some brokers and investment managers).Where interest on the Capital Securities has been paid under deduction of United Kingdom income tax,Capital Security Holders who are not resident in the United Kingdom may be able to recover all or partof the tax deducted if there is an appropriate provision in an applicable double taxation treaty.The provisions relating to additional payments referred to in Condition 11 of "Terms and Conditions ofthe Capital Securities" would not apply if the Inland Revenue sought to assess the person entitled to therelevant interest or (where applicable) profit on any Capital Security directly to United Kingdom incometax. However, exemption from or reduction of such United Kingdom tax liability might be availableunder an applicable double taxation treaty.Proposed EU Directive on the taxation of savings incomeThe council of the European Union has published a draft Directive regarding the taxation of savingsincome. Subject to a number of important conditions being met, it is proposed that Member States willbe required to provide to the tax authorities of another Member State details of payments of interest orother similar income paid by a person within its jurisdiction to an individual resident in that otherMember State, except that Belgium, Luxembourg and Austria will instead operate a withholding systemfor a transitional period in relation to such payments. The proposed Directive is not yet final, and maybe subject to further amendments.39