PART XII SPECIAL CLASSES OF COMPANIES AND BUSINESSES
CHAPTER II FRIENDLY SOCIETIES, TRADE UNIONS AND EMPLOYERS’ ASSOCIATIONS
Registered friendly societies
460 Exemption from tax in respect of life or endowment business.
1
2
Subsection (1) above—
a
M2shall not, subject to section 462, exempt a F5registered friendly society registered after 31st December 1957 which at any time in the period of three months ending 3rd May 1966 entered into any transaction in return for a single premium, being a transaction forming part of its life or endowment business;
F6aa
shall not, subject to section 462, exempt an incorporated friendly society which, before its incorporation, was a registered friendly society such as is mentioned in paragraph (a) above;
b
M3shall not apply to profits arising from pension business;
c
M4shall not apply to profits arising from life or endowment business consisting—
F7ai
where the profits relate to contracts made on or after the day on which the Finance Act 1991 was passed, of the assurance of gross sums under contracts under which the total premiums payable in any period of 12 months exceed £200 or of the granting of annuities of annual amounts exceeding £156;
i
where the profits relate to contracts made after F831st August 1990 but before the day on which the Finance Act 1991 was passed, of the assurance of gross sums under contracts under which the total premiums payable in any period of 12 months exceed F9£150 or of the granting of annuities of annual amounts exceeding £156;
F10ia
where the profits relate to contracts made after 31st August 1987 but before 1st September 1990, of the assurance of gross sums under contracts under which the total premiums payable in any period of 12 months exceed £100 F11or of the granting of annuities of annual amounts exceeding £156.
ii
where the profits relate to contracts made after 13th March 1984 but before 1st September 1987, of the assurance of gross sums exceeding £750 or of the granting of annuities of annual amounts exceeding £156;
iii
where the profits relate to contracts made before 14th March 1984, of the assurance of gross sums exceeding £500 or of the granting of annuities of annual amounts exceeding £104;
F12ca
shall not apply to so much of the profits arising from life or endowment business as is attributable to contracts for the assurance of gross sums made on or after 20th March 1991 and expressed at the outset not to be made in the course of tax exempt life or endowment business; and
d
M5as respects other life or endowment business (“tax exempt life or endowment business”), has effect subject to the following provisions of this Chapter.
3
M6In determining for the purposes F13of F14subsection (2)(c)(ai), (i) or (ia) above the total premiums payable in any period of 12 months—
a
where those premiums are payable more frequently than annually, there shall be disregarded an amount equal to 10 per cent. of those premiums; and
b
so much of any premium as is charged on the ground that an exceptional risk of death F1or disability is involved shall be disregarded;
and in applying the limit of £156 in F15subsection (2)(c)(ai), (i) or (ia) above, any bonus or addition declared upon an annuity shall be disregarded.
4
In applying the limits referred to in subsection (2)(c)(ii) and (iii) above, any bonus or addition which either is declared upon an assurance of a gross sum or annuity or accrues upon such an assurance by reference to an increase in the value of any investments shall be disregarded.
F164A
Subsection (4B) below applies to contracts for the assurance of gross sums under tax exempt life or endowment business made after 31st August 1987 and before the day on which the Finance Act 1991 was passed.
4B
Where the amount payable by way of premium under a contract to which this subsection applies is increased by virtue of a variation made in the period beginning with the day on which the Finance Act 1991 was passed and ending with 31st July 1992, the contract shall be treated for the purposes of subsection (2)(c) above as made at the time of the variation.
5
6
a
subsection (2)(c)(iii) above shall have effect with the substitution of references to £2,000 and £416 respectively for the references to £500 and £104; and
b
references in this Chapter to tax exempt life or endowment business shall be construed accordingly.
7
M9Where at any time a F17friendly society within subsection (5) above amends its rules so as to cease to be within that subsection, any part of its life or endowment business consisting of business which—
a
relates to contracts made before that time; and
b
immediately before that time was tax exempt life or endowment business,
shall thereafter continue to be tax exempt life or endowment business for the purposes of this Chapter.
8
Where at any time a F17friendly society not within subsection (5) above amends its rules so as to bring itself within that subsection, any part of its life or endowment business consisting of business which—
a
related to contracts made before that time; and
b
immediately before that time was not tax exempt life or endowment business,
shall thereafter continue not to be tax exempt life or endowment business for the purposes of this Chapter.
9
Where at any time a F17friendly society not within subsection (5) above acquires by way of transfer of engagements or amalgamation from another F17friendly society any life or endowment business consisting of business which—
a
relates to contracts made before that time; and
b
immediately before that time was tax exempt life or endowment business,
that business shall thereafter continue to be tax exempt life or endowment business for the purposes of this Chapter.
10
Where at any time a F17 friendly society within subsection (5) above acquires by way of transfer of engagements or amalgamation from another F17friendly society any life or endowment business consisting of business which—
a
relates to contracts made before that time; and
b
immediately before that time was not tax exempt life or endowment business,
that business shall thereafter continue not to be tax exempt life or endowment business for the purposes of this Chapter.
F1810A
Where at any time there is a transfer of the whole or part of the long term business of an insurance company to a friendly society in accordance with a scheme sanctioned by a court under section 49 of the M10Insurance Companies Act 1982, any life or endowment business which relates to contracts included in the transfer F2, other than any to which subsection (11) or (12) below applied immediately before the transfer had effect, shall not thereafter be tax exempt life or endowment business for the purposes of this Chapter.
11
M11Where at any time a F19friendly society ceases by virtue of section 84 of the M12Friendly Societies Act 1974 or by virtue of F19section 91 of the Friendly Societies Act 1992 (conversion into company) to be registered under F19either of those Acts, any part of its life or endowment business consisting of business which—
a
relates to contracts made before that time; and
b
immediately before that time was tax exempt life or endowment business,
shall F3continue to be exempt from corporation tax (whether on income or chargeable gains) on profits arising from it.
12
M13For the purposes of the Corporation Tax Acts any part of a company’s business which continues to be tax exempt life or endowment business by virtue of subsection (11) above shall be treated as a separate business from any other business carried on by the company.