Income and Corporation Taxes Act 1988

Registered friendly societies U.K.

460 Exemption from tax in respect of life or endowment business. U.K.

(1) M1 Subject to subsection (2) below, a [F1 friendly society] shall, on making a claim, be entitled to exemption from F2 . . . corporation tax (whether on income or chargeable gains) on its profits arising from life or endowment business.

(2) Subsection (1) above—

(a) M2 shall not, subject to section 462, exempt a [F3 registered 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;

[F4 (aa) 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) M3 shall not apply to profits arising from [F5 gross roll-up business];

(c) M4 shall not apply to profits arising from life or endowment business consisting—

[F6 (zai) where the profits relate to contracts made on or after the day on which the Finance Act 1995 was passed, of the assurance of gross sums under contracts under which the total premiums payable in any period of 12 months exceed £270 or of the granting of annuities of annual amounts exceeding £156;]

[F7 (ai) where the profits relate to contracts made on or after the day on which the Finance Act 1991 was passed [F8 but before the day on which the Finance Act 1995 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 [F9 31st 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 [F10 £150] or of the granting of annuities of annual amounts exceeding £156;

[F11 (ia) 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 [F12 or 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;

[F13 (ca) 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;][F14 and]

[F15 (cb) F16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(d) M5 as respects other life or endowment business (“tax exempt life or endowment business”), has effect subject to the following provisions of this Chapter.

(3) M6 In determining for the purposes of [F17 [F18 subsection (2)(c)(zai), (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 [F19 or disability] is involved shall be disregarded;

and in applying the limit of £156 in [F20 [F18 subsection (2)(c)(zai), (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.

[F21 (4A) 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 [F22 the Finance Act 1995] 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 [F23 variation made—

(a) in the period beginning with 25th July 1991 and ending with 31st July 1992, or

(b) in the period beginning with the day on which the Finance Act 1995 was passed and ending with 31st March 1996,

the contract shall, for the purposes of subsection (2)(c) above, be treated, in relation to any profits relating to it as varied, as made at the time of the variation.]]

(5) M7 A [F24 friendly society] is within this subsection if its rules make no provision for it to carry on life or endowment business consisting of the assurance of gross sums exceeding £2,000 or of the granting of annuities of annual amounts exceeding £416.

(6) M8 In the case of a [F24 friendly society] within subsection (5) above—

(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) M9 Where at any time a [F24 friendly 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 [F24 friendly 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 [F24 friendly society] not within subsection (5) above acquires by way of transfer of engagements or amalgamation from another [F24 friendly 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 [F24 friendly society] within subsection (5) above acquires by way of transfer of engagements or amalgamation from another [F24 friendly 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.

[F25 (10A) [F26 Where at any time an insurance business transfer scheme has effect to transfer to a friendly society long-term business,] any life or endowment business which relates to contracts included in the transfer [F27 , 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.]

[F28 (10B) F29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(11) M10 Where at any time a [F30 friendly society] ceases F31 . . . by virtue of [F30 section 91 of the Friendly Societies Act 1992] (conversion into company) to be registered under [F32 that Act], 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 [F33 continue to be exempt from corporation tax (whether on income or chargeable gains) on profits arising from it.]

[F34 (12) Where at any time an insurance company acquires by way of transfer of engagements from a friendly 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 continue to be exempt from corporation tax (whether on income or chargeable gains) on profits arising from it.

(13) But if any contracts constituting or forming part of the business of a company covered by subsection (11) or (12) above are varied during an accounting period of the company so as to increase the premiums payable under them, the business relating to those contracts is not exempt from corporation tax for that or any subsequent accounting period.

(14) For the purposes of the Corporation Tax Acts any part of a company's business which is exempt from corporation tax by virtue of subsection (11) or (12) above shall be treated as a separate business from any other business carried on by the company.]

[F35 (15) The Treasury may by regulations provide that, where any part of the business of a company is exempt from corporation tax by virtue of subsection (11) or (12) above, the Corporation Tax Acts have effect subject to such modifications (or exceptions) as the Treasury consider appropriate.

(16) Regulations under subsection (15) above—

(a) may make different provision for different cases,

(b) may include any incidental, supplementary, consequential or transitional provisions which the Treasury consider appropriate, and

(c) may include retrospective provision.]

Textual Amendments

F1 Words in s. 460(1) substituted (19.2.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 para. 5(2); S.I. 1993/236, art.2

F2 Words in s. 460(1) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 80, Sch. 3 Pt. 1 (with Sch. 2)

F3 Words in s. 460(2)(a) substituted (19.2.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 para. 5(3)(a); S.I. 1993/236, art.2

F4 S. 460(2)(aa) inserted (19.2.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 para. 5(3)(b); S.I. 1993/236, art.2

F5 Words in s. 460(2) substituted (with effect in accordance with s. 38(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 7 para. 40(a) (with Sch. 7 Pt. 2)

F6 S. 460(2)(c)(zai) inserted (1.5.1995) by Finance Act 1995 (c. 4), Sch. 10 para. 1(2)

F7 S. 460(2)(ai) inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 50, Sch. 9 para. 1(3)

F8 Words in s. 460(2)(c)(ai) inserted (1.5.1995) by Finance Act 1995 (c. 4), Sch. 10 para. 1(3)

F9 Words in s. 460(2)(c)(i) substituted by Finance Act 1991 (c. 31, SIF 63:1), s. 50, Sch. 9 para. 1(4)

F10 1990 s.49(1)(a) Previously £100

F11 1990 s.49(1)(b).

F12 Words in s. 460(2)(c)(ia) inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 50, Sch. 9 para. 1(5)

F13 S. 460(2)(ca) and word "and" substituted for word "and" by Finance Act 1991 (c. 31, SIF 63:1), s. 50, Sch. 9 para. 1(6)

F14 Word at the end of s. 460(2)(ca) inserted (with effect in accordance with s. 38(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 7 para. 40(b) (with Sch. 7 Pt. 2)

F15 S. 460(2)(cb) inserted (6.4.2001) by Finance Act 2001 (c. 9), s. 76, Sch. 25 para. 8(1)

F16 S. 460(2)(cb) repealed (with effect in accordance with s. 38(2) of the repealing Act) by Finance Act 2007 (c. 11), Sch. 7 para. 40(c), Sch. 27 Pt. 2(7), Note (with Sch. 7 Pt. 2)

F17 Words in s. 460(3) substituted by Finance Act 1991 (c. 31, SIF 63:1), s. 50, Sch. 9 para. 1(7)(a)

F18 Words in s. 460(3) substituted (1.5.1995) by Finance Act 1995 (c. 4), Sch. 10 para. 1(4)

F19 Words in s. 460(3)(b) inserted (retrospectively) by Finance Act 2003 (c. 14), s. 172(5)(6)

F20 Words in s. 460(3) substituted by Finance Act 1991 (c. 31, SIF 63:1), s. 50, Sch. 9 para. 1(7)(b)

F21 S. 460(4A)(4B) inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 50, Sch. 9 para. 1(8)

F22 Words in s. 460(4A) substituted (1.5.1995) by Finance Act 1995 (c. 4), Sch. 10 para. 1(5)

F23 Words in s. 460(4B) substituted (1.5.1995) by Finance Act 1995 (c. 4), Sch. 10 para. 1(6)

F24 Words in s. 460(5)-(10) substituted (19.2.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 para. 5(4); S.I. 1993/236, art. 2

F25 1990 s. 48 and Sch. 9 para. 6 in relation to transfers of business on or after 1 January 1990

F26 Words in s. 460(10A) substituted (1.12.2001 with effect in accordance with arts. 1(2)(a), 32(5) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 32(2)

F27 Words in s. 460(10A) inserted (retrospectively for specified purposes, and otherwise with effect in accordance with Sch. 12 para. 6(3) of the amending Act) by Finance Act 2007 (c. 11), Sch. 12 paras. 1(2), 6(1)(3)

F28 S. 460(10B) inserted (1.12.2001 with effect in accordance with arts. 1(2)(a), 32(5) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 32(3)

F29 S. 460(10B) repealed (with effect in accordance with Sch. 9 para. 17(1) of the repealing Act) by Finance Act 2007 (c. 11), Sch. 9 para. 1(2)(d), Sch. 27 Pt. 2(9), Note

F30 Words in s. 460(11) substituted (19.2.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 para. 5(5); S.I. 1993/236, art.2

F31 Words in s. 460(11) omitted (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by virtue of The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 32(4)(a)

F32 Words in s. 460(11) substituted (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 32(4)(b)

F33 Words in s. 460(11) substituted (retrospectively) by Finance Act 2007 (c. 11), Sch. 12 paras. 1(3), 6(1)

F34 S. 460(12)-(14) substituted for s. 460(12) (with effect in accordance with Sch. 12 para. 6(3) of the amending Act) by Finance Act 2007 (c. 11), Sch. 12 para. 1(4)

F35 S. 460(15)(16) inserted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 12 para. 1(5)

Modifications etc. (not altering text)

C1 S. 460(2) modified (6.4.1999) by The Friendly Societies (Modification of the Corporation Tax Acts) Regulations 1997 (S.I. 1997/473), reg. 31 (as inserted by The Individual Savings Account (Insurance Companies) Regulations 1998 (S.I. 1998/1871), regs. 1, 25(5))

C2 S. 460(2) modified (12.8.2005 with effect in accordance with reg. 1(2) of the modifying S.I.) by The Friendly Societies (Modification of the Corporation Tax Acts) Regulations 2005 (S.I. 2005/2014), regs. 1(1), 20; and that modifying reg. 20 is omitted (14.8.2007 with effect in accordance with reg. 1(2) of the revoking S.I.) by virtue of S.I. 2007/2134, regs. 1(1), 18(b)

Marginal Citations

M1 Source—1970 s.332(1). 1974 s.27(1)(a)

M2 Source—1970 s.333(1)

M3 Source—1970 s.332(2)(aa); 1987 (No.2) Sch.2 2(1)

M4 Source—1970 s.332(2)(a); 1984 s.73(2); 1987 s.30(2)

M5 Source—1970 s.332(2)(b)

M6 Source—1970 s.332(3); 1987 s.30(3)

M7 Source—1970 s.332(4); 1975 (No.2) s.52(1); 1980 s.57(1)

M8 Source—1970 s.332(5); 1975 (No.2) s.52(1); 1984 s.73(3)

M9 Source—1970 s.332(6)—(9); 1975 (No.2) s.52(1)

M10 Source—1970 s.332(10); 1976 s.48(1)

461 Taxation in respect of other business. U.K.

(1) M11 Subject to the following provisions of this section, a registered friendly society other than a society to which subsection (2) below applies shall, on making a claim, be entitled to exemption from F36 . . . corporation tax (whether on income or chargeable gains) on its profits other than those arising from life or endowment business.

(2) M12 This subsection applies to any society registered after 31st May 1973 unless—

(a) its business is limited to the provision, in accordance with the rules of the society, of benefits for or in respect of employees of a particular employer or such other group of persons as is for the time being approved for the purposes of this section by the [F37 Board]; or

(b) it was registered before 27th March 1974 and its rules limit the aggregate amount which may be paid by a member by way of contributions and deposits to not more than £1 per month or such greater amount as the [F37 Board] may authorise for the purposes of this section;

and also applies to any society registered before 1st June 1973 with respect to which a direction under subsection [F38 (7)] below is in force.

(3) M13 If a society to which subsection (2) above applies, after 26th March 1974 or such later date as may be specified in a direction under this section, makes a payment to a member in respect of his interest in the society and the payment is made otherwise than in the course of life or endowment business and exceeds the aggregate of any sums paid by him to the society by way of contributions or deposits, after deducting from that aggregate the amount of—

(a) any previous payment so made to him by the society after that date, and

(b) any earlier repayment of such sums paid by him,

the excess shall be treated for the purposes of corporation tax and income tax as a qualifying distribution.

[F39 (3A) F40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(4) M14 Where a registered friendly society—

(a) at any time ceases F41 . . . by virtue of [F42 section 91 of the Friendly Societies Act 1992] (conversion into company) to be registered under [F43 that Act]; and

(b) immediately before that time was exempt from F44 . . . corporation tax on profits arising from any business carried on by it other than life or endowment business,

the company into which the society is converted shall be so exempt on its profits arising from any part of that business which relates to contracts made before that time so long as there is no increase in the scale of benefits which it undertakes to provide in the course of carrying on that part of its business.

[F45 (4A) Where—

(a) at any time an insurance company acquires by way of transfer of engagements from a registered friendly society any business other than life or endowment business, and

(b) immediately before that time the society was exempt from corporation tax on profits arising from that business,

the insurance company shall be exempt from corporation tax on its profits arising from any part of that business which relates to contracts made before that time.

(4B) But if during an accounting period of the insurance company there is an increase in the scale of benefits which it undertakes to provide in the course of carrying on any such part of that business, the company shall not be exempt from corporation tax by virtue of subsection (4A) above for that or any subsequent accounting period.]

(5) For the purposes of the Corporation Tax Acts any part of a company’s business in respect of the profits from which the company is exempt by virtue of subsection (4) [F46 or (4A)] above shall be treated as a separate business from any other business carried on by the company.

(6) M15 If—

(a) a friendly society registered before 1st June 1973 begins after 26th March 1974 to carry on business other than life or endowment business or, in the opinion of [F47 the Board], begins to carry on business other than life or endowment business on an enlarged scale or of a new character; and

(b) it appears to [F47 the Board], having regard to the restrictions imposed by this section on friendly societies registered later, that for the protection of the revenue it is expedient to do so;

[F48 the Board may give a direction to the society under subsection (7) below.]

[F49 (7) A direction under this subsection is that (and has the effect that) the society to which it is given is to be treated for the purposes of this Act as a society registered after 31st May 1973 with respect to business carried on after the date of the direction.

(8) A society to which a direction is given may, within 30 days of the date on which it is given, appeal against the direction to the Special Commissioners on the ground that—

(a) it has not begun to carry on business as mentioned in subsection (6)(a) above; or

(b) the direction is not necessary for the protection of the revenue.

(9) If a registered friendly society in respect of which a direction is in force under subsection (7) above becomes an incorporated friendly society, the direction shall continue to have effect, so that the incorporated friendly society shall be treated for the purposes of this Act as a society registered after 31st May 1973.]

(10) For the purposes of this section a registered friendly society formed on the amalgamation of two or more friendly societies shall be treated as registered before 1st June 1973 if at the time of the amalgamation subsection (2) above did not apply to any of the societies amalgamated, but otherwise shall be treated as registered at that time.

[F50 (11) For the purposes of this section and section 461C—

(a) any group of persons which was approved for the purposes of this section (as mentioned in subsection (2)(a) above) immediately before 1st December 2001 shall be treated as having been approved for the purposes of this section by the Board on that date;

(b) any greater amount which was authorised for the purposes of this section (as mentioned in subsection (2)(b) above) immediately before 1st December 2001 shall be treated as having been authorised for the purposes of this section by the Board on that date; and

(c) where a direction that subsection (2) above applies to a society was in force immediately before 1st December 2001, a direction in relation to that society shall be treated as having been made under subsection (7) above by the Board on that date.]

[F51 (12) The Treasury may by regulations provide that, where any part of the business of a company is exempt from corporation tax by virtue of subsection (4) or (4A) above, the Corporation Tax Acts have effect subject to such modifications (or exceptions) as the Treasury consider appropriate.

(13) Regulations under subsection (12) above—

(a) may make different provision for different cases,

(b) may include any incidental, supplementary, consequential or transitional provisions which the Treasury consider appropriate, and

(c) may include retrospective provision.]

Textual Amendments

F36 Words in s. 461(1) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 81(2), Sch. 3 Pt. 1 (with Sch. 2)

F37 Words in s. 461(2)(a)(b) substituted (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 33(2)(a)

F38 Word in s. 461(2) substituted (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 33(2)(b)

F39 S. 461(3A) inserted (6.4.2001) by Finance Act 2001 (c. 9), s. 76, Sch 25 para. 8(2)

F40 S. 461(3A) repealed (with effect in accordance with s. 38(2) of the repealing Act) by Finance Act 2007 (c. 11), Sch. 7 para. 41, Sch. 27 Pt. 2(7), Note (with Sch. 7 Pt. 2)

F41 Words in s. 461(4)(a) omitted (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by virtue of The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 33(3)(a)

F42 Words in s. 461(4)(a) substituted (19.2.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 para. 6; S.I. 1993/236, art. 2

F43 Words in s. 461(4)(a) substituted (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 33(3)(b)

F44 Words in s. 461(4)(b) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 81(3), Sch. 3 Pt. 1 (with Sch. 2)

F45 S. 461(4A)(4B) inserted (with effect in accordance with Sch. 12 para. 6(3) of the amending Act) by Finance Act 2007 (c. 11), Sch. 12 para. 4(2)

F46 Words in s. 461(5) inserted (with effect in accordance with Sch. 12 para. 6(3) of the amending Act) by Finance Act 2007 (c. 11), Sch. 12 para. 4(3)

F47 Words in s. 461(6)(a)(b) substituted (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2110/3629), art. 33(4)(a)

F48 Words in s. 461(6) substituted (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 33(4)(b)

F49 S. 461(7)-(9) substituted (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 33(5)

F50 S. 461(11) added (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 33(6)

F51 S. 461(12)(13) inserted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 12 para. 4(4)

Marginal Citations

M11 Source—1970 s.332(1); 1974 s.27(1)(a)

M12 Source—1974 s.27(2)

M13 Source—1974 s.27(1)(b)

M14 Source—1970 s.332(11), (12)(b); 1976 s.48(1)

M15 Source—1974 s.27(3)—(7); 1985 s.41(10); 1987 Sch.15 6

[461A F52 Taxation in respect of other business: incorporated friendly societies qualifying for exemption. U.K.

(1) For the purposes of sections 461B and 461C, a “qualifying society” is an incorporated friendly society which—

(a) immediately before its incorporation, was a registered friendly society to which section 461(2) did not apply,

(b) was formed otherwise than by the incorporation of a registered friendly society or the amalgamation of two or more friendly societies and satisfies subsection (2) below, or

(c) was formed by the amalgamation of two or more friendly societies and satisfies subsection (3) below,

and in respect of which no direction under section 461C(5) is in force.

(2) A society satisfies this subsection if its business is limited to the provision, in accordance with the rules of the society, of benefits for or in respect of employees of a particular employer or such other group of persons as is for the time being approved for the purposes of this section by the [F53 Board].

(3) If at the time of the amalgamation referred to in subsection (1)(c) above—

(a) section 461(2) applied to none of the registered friendly societies being amalgamated (if any), and

(b) all of the incorporated friendly societies being amalgamated (if any) were qualifying societies,

the society formed by the amalgamation satisfies this subsection.

[F54 (4) For the purposes of this section and section 461C, any group of persons which was approved for the purposes of this section (as mentioned in subsection (2) above) by the Friendly Societies Commission immediately before 1st December 2001 shall be treated as having been approved for the purposes of this section by the Board on that date.]]

Textual Amendments

F52 Ss. 461A-461C inserted (19.2.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 para.7; S.I. 1993/236, art.2

F53 Word in s. 461A(2) substituted (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 34(2)

F54 S. 461A(4) added (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 34(3)

F55 461B Taxation in respect of other business: incorporated friendly societies etc. U.K.

(1) Subject to the following provisions of this section, a qualifying society shall, on making a claim, be entitled to exemption from F56 . . . corporation tax (whether on income or chargeable gains) on its profits other than those arising from life or endowment business.

(2) Subsection (1) above shall not apply to any profits arising or accruing to the society from, or by reason of its interest in, a body corporate which is a subsidiary (within the meaning of the Friendly Societies Act 1992) of the society or of which the society has joint control (within the meaning of that Act).

[F57 (2A) F58 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(3) If an incorporated friendly society which is not a qualifying society makes a payment to a member in respect of his interest in the society and the payment is made otherwise than in the course of life or endowment business and exceeds the aggregate of any sums paid by him to the society by way of contributions or deposits, after deducting from that aggregate the amount of—

(a) any previous payment so made to him by the society, and

(b) any earlier repayment of such sums paid by him,

the excess shall be treated for the purposes of corporation tax and income tax as a qualifying distribution.

(4) In relation to an incorporated friendly society which, immediately before its incorporation, was a registered friendly society to which section 461(2) applied—

(a) the references in subsection (3) above to sums paid to the society shall include sums paid to the registered friendly society,

(b) the reference in subsection (3)(a) above to any payment made by the society shall include any payment made by the registered friendly society after 26 March 1974 or such later date as was specified in any direction under section 461 [F59 (7)] relating to it, and

(c) the reference in subsection (3)(b) above to any repayment shall include any repayment made by the registered friendly society.

(5) Where a qualifying society at any time ceases by virtue of section 91 of the Friendly Societies Act 1992 (conversion into company) to be registered under that Act, the company into which the society is converted shall be exempt from F60 . . . corporation tax on its profits arising from any part of its business, other than life or endowment business, which relates to contracts made before that time.

[F61 (6) But if during an accounting period of the company there is an increase in the scale of benefits which it undertakes to provide in the course of carrying on any such part of its business, the company shall not be exempt from corporation tax by virtue of subsection (5) above for that or any subsequent accounting period.

(6A) Where—

(a) at any time an insurance company acquires by way of transfer of engagements from a qualifying society any business other than life or endowment business, and

(b) immediately before that time the society was exempt from corporation tax on profits arising from that business,

the insurance company shall be exempt from corporation tax on its profits arising from any part of that business which relates to contracts made before that time.

(6B) But if during an accounting period of the insurance company there is an increase in the scale of benefits which it undertakes to provide in the course of carrying on any such part of that business, the company shall not be exempt from corporation tax by virtue of subsection (6A) above for that or any subsequent accounting period.]

(7) Any part of a company’s business to which an exemption under subsection (5) [F62 or (6A)] above relates shall be treated for the purposes of the Corporation Tax Acts as a separate business from any other business carried on by the company.

[F63 (8) The Treasury may by regulations provide that, where any part of the business of a company is exempt from corporation tax by virtue of subsection (5) or (6A) above, the Corporation Tax Acts have effect subject to such modifications (or exceptions) as the Treasury consider appropriate.

(9) Regulations under subsection (8) above—

(a) may make different provision for different cases,

(b) may include any incidental, supplementary, consequential or transitional provisions which the Treasury consider appropriate, and

(c) may include retrospective provision.]

Textual Amendments

F55 Ss. 461A-461C inserted (19.2.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 para.7; S.I. 1993/236, art. 2

F56 Words in s. 461B(1) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 82(2), Sch. 3 Pt. 1 (with Sch. 2)

F57 S. 461B(2A) inserted (6.4.2001) by Finance Act 2001 (s. 9), s. 76, Sch. 25 para. 8(3)

F58 S. 461B(2A) repealed (with effect in accordance with s. 38(2) of the repealing Act) by Finance Act 2007 (c. 11), Sch. 7 para. 42, Sch. 27 Pt. 2(7), Note (with Sch. 7 Pt. 2)

F59 Word in s. 461B(4)(b) substituted (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 35

F60 Words in s. 461B(5) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 82(3), Sch. 3 Pt. 1 (with Sch. 2)

F61 S. 461B(6)-(6B) substituted for s. 461B(6) (with effect in accordance with Sch. 12 para. 6(3) of the amending Act) by Finance Act 2007 (c. 11), Sch. 12 para. 5(2)

F62 Words in s. 461B(7) inserted (with effect in accordance with Sch. 12 para. 6(3) of the amending Act) by Finance Act 2007 (c. 11), Sch. 12 para. 5(3)

F63 S. 461B(8)(9) inserted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 12 para. 5(4)

F64 461C Taxation in respect of other business: withdrawal of “qualifying” status from incorporated friendly society. U.K.

(1) Subject to subsection (2) below, subsections (3) [F65 and (4)] below apply where a qualifying society—

(a) begins to carry on business other than life or endowment business, or

(b) in the opinion of the [F66 Board], begins to carry on business other than life or endowment business on an enlarged scale or of a new character.

(2) Subsections (3) [F67 and (4)] below do not apply if—

(a) the society’s business is limited to the provision, in accordance with the rules of the society, of benefits for or in respect of employees of a particular employer or such other group of persons as is for the time being approved for the purposes of section 461 or 461A by the [F68 Board], or

(b) the society’s rules limit the aggregate amount which may be paid by a member by way of contributions and deposits to not more than £1 per month or such greater amount as is authorised for the purposes of section 461.

(3) If it appears to the [F69 Board], having regard to the restrictions imposed by section 461 on registered friendly societies registered after 31st May 1973, that for the protection of the revenue it is expedient to do so, the [F69 Board] may [F70 give a direction to the society under subsection (4) below.]

[F71 (4) A direction under this subsection is that (and has the effect that) the society to which it is given shall cease to be a qualifying society as from the date of the direction.

(5) A society to which a direction is given may, within 30 days of the date on which it is given, appeal against the direction to the Special Commissioners on the ground that—

(a) it has not begun to carry on business as mentioned in subsection (1) above;

(b) subsections (3) and (4) above do not apply to it by reason of subsection (2) above; or

(c) the direction is not necessary for the protection of the revenue.]

Textual Amendments

F64 Ss. 461A-461C inserted (19.2.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 para.7; S.I. 1993/236, art. 2

F65 Words in s. 461C(1) substituted (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 36(2)(a)

F66 Word in s. 461C(1) substituted (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 36(2)(b)

F67 Words in s. 461C(2) substituted (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 36(3)(a)

F68 Word in s. 461C(2)(a) substituted (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 36(3)(b)

F69 Words in s. 461C(3) substituted (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 36(4)(a)

F70 Words in s. 461C(3) substituted (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), arts. 36(4)(b)

F71 S. 461C(4)(5) substituted for s. 461C(4)-(7) (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 36(5)

[F72 461D Transfers of other business U.K.

(1) Where—

(a) at any time a friendly society (“the transferee”) acquires by way of transfer of engagements or amalgamation from another friendly society (“the transferor”) any business, other than life or endowment business, consisting of business which relates to contracts made before that time, and

(b) immediately before that time the transferor was exempt from corporation tax on profits arising from that business,

the transferee is so exempt after that time.

(2) But if during an accounting period of the transferee there is an increase in the scale of benefits which it undertakes to provide in the course of carrying on that business, the transferee shall not be exempt from corporation tax by virtue of subsection (1) above for that or any subsequent accounting period.

(3) Where—

(a) at any time a friendly society (“the transferee”) acquires by way of transfer of engagements or amalgamation from another friendly society (“the transferor”) any business, other than life or endowment business, consisting of business which relates to contracts made before that time, and

(b) immediately before that time the transferor was not exempt from corporation tax on profits arising from that business,

the transferee is not so exempt after that time.

(4) The Treasury may by regulations provide that, where any business of a friendly society is exempt from corporation tax by virtue of subsection (1) above, or not so exempt by virtue of subsection (3) above, the Corporation Tax Acts have effect subject to such modifications (or exceptions) as the Treasury consider appropriate.

(5) Regulations under subsection (4) above—

(a) may make different provision for different cases,

(b) may include any incidental, supplementary, consequential or transitional provisions which the Treasury consider appropriate, and

(c) may include retrospective provision.]

Textual Amendments

F72 S. 461D inserted (with effect in accordance with Sch. 18 para. 3(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 18 para. 3(1)

462 Conditions for tax exempt business. U.K.

[F73 (1) Subject to [F74 subsection (2)] below, section 460 does not afford any exemption from corporation tax in relation to so much of the profits arising to a friendly society or insurance company from any business as is attributable to a policy which—

(a) is not a qualifying policy (by virtue of sub-paragraph (2) of paragraph 6 of Schedule 15) and is not an excluded policy, and

(b) would not be a qualifying policy (by virtue of that sub-paragraph) if all excluded policies were left out of account.

(1A) For the purposes of subsection (1) above a policy is an excluded policy if—

(a) it is a policy held otherwise than with the friendly society or insurance company, or

(b) the person who has the contract effecting the policy acquired the rights under it on an assignment (or, in Scotland, assignation) otherwise than for money or money's worth.]

(2) [F75 M16 Section 460(2)(a) or (aa)] and subsection (1) above shall not withdraw exemption [F76 in relation to profits arising from any part of a] business relating to contracts made not later than 3rd May 1966.

F77 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F77 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F73 S. 462(1)(1A) substituted for s. 462(1) (retrospective to 1.1.2007) by Finance Act 2007 (c. 11), s. 45(2)(6)

F74 Words in s. 462(1) substituted (21.7.2008) by Finance Act 2008 (c. 9), Sch. 18 para. 5(2)

F75 Words in s. 462(2)(a) substituted (19.2.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 par. 8(2) S.I. 1993/236, art.2

F76 Words in s. 462(2) substituted (retrospective to 1.1.2007) by Finance Act 2007 (c. 11), s. 45(3)(6)

F77 S. 462(3)(4) omitted (21.7.2008) by virtue of Finance Act 2008 (c. 9), Sch. 18 para. 5(1)(a)

Marginal Citations

M16 Source—1970 s.336; 1985 Sch.10 Part II

[F78 462A Election as to tax exempt business. U.K.

F79 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F78 S. 462A inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 50, Sch. 9 para. 2

F79 S. 462A omitted (21.7.2008) by virtue of Finance Act 2008 (c. 9), Sch. 18 para. 5(1)(b)

463 [F80 Long-term] business: application of the Corporation Tax Acts. U.K.

(1) M17 Subject to section 460(1), the Corporation Tax Acts shall apply to [F81 long-term] business carried on by [F82 friendly societies] in the same way as they apply to mutual life assurance business [F83 (or other [F84 long-term] business)] carried on by insurance companies, so however that the Treasury may by regulations provide that those Acts as so applied shall have effect subject to such modifications and exceptions as may be prescribed by the regulations, and those regulations may in particular require any part of any business to be treated as a separate business.

[F85 (2) The provisions of the Corporation Tax Acts which apply on the transfer of the whole or part of the [F84 long-term] business of an insurance company shall apply in the same way—

(a) on the transfer of the whole or part of the business of a friendly society to another friendly society (and on the amalgamation of friendly societies), and

(b) on the transfer of the whole or part of the business of a friendly society to a company which is not a friendly society (and on the conversion of a friendly society into such a company),

so however that the Treasury may by regulations provide that those provisions as so applied shall have effect subject to such modifications and exceptions as may be prescribed by the regulations.

(3) The Treasury may by regulations provide that the provisions of the Corporation Tax Acts which apply on the transfer of the whole or part of the [F84 long-term] business of an insurance company to another company shall have effect where the transferee is a friendly society subject to such modifications and exceptions as may be prescribed by the regulations.

(4) Regulations under this section may make different provision for different cases and may include provision having retrospective effect.]

Textual Amendments

F80 Words in s. 463 heading substituted (21.7.2008) by Finance Act 2008 (c. 9), Sch. 18 para. 4

F81 Words in s. 463(1) substituted (21.7.2008) by Finance Act 2008 (c. 9), Sch. 18 para. 4

F82 Words in s. 463(1) substituted (19.2.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 para.10; S.I. 1993/236, art.2

F83 Words in s. 463(1) inserted (with effect in accordance with s. 171(6) of the amending Act) by Finance Act 1996 (c. 8), s. 171(5)

F84 Words in s. 463(1)(2)(3) substituted (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 52(2)(i)

F85 1990 s.50(2).

Modifications etc. (not altering text)

C3 See 1990 s.50(1)—s.463was renumbered as s.463(1).

C4 For regulations see Part III Vol.5 (under

“Friendly Societies”).

Marginal Citations

M17 Source—1970 s.335(1)

464 Maximum benefits payable to members. U.K.

[F86 (1) Subject to subsections (2) and (3) below, a person is not entitled to have at any time outstanding contracts with any one or more friendly societies, registered branches or insurance companies which (taking them all together) are for the assurance of—

(a) more than £750 by way of gross sum under business which is afforded exemption from corporation tax by section 460, or

(b) more than £156 by way of annuity under such business.]

In any case where the member’s outstanding contracts were all made before 14th March 1984 this subsection shall have effect with the substitution for “£750” and “£156” of “ £2,000 ” and “ £416 ” respectively.

(2) Subsection (1)(a) above shall not apply as respects sums assured under contracts made after 31st August 1987.

(3) [F87 With respect to contracts for the assurance of gross sums under business which is afforded exemption from corporation tax by section 460, a person is not entitled to have outstanding at any time with any one or more friendly societies, registered branches or insurance companies—]

[F88 (zza) contracts under which the total premiums payable in any period of 12 months exceed £270; or]

[F89 (za) contracts [F90 made before the day on which the Finance Act 1995 was passed and] under which the total premiums payable in any period of 12 months exceed £200; or]

(a) contracts [F91 made before the day on which the Finance Act 1991 was passed and] under which the total premiums payable in any period of 12 months exceed £150; or

(b) contracts made before 1st September 1990 under which the total premiums payable in any period of 12 months exceed £100,

unless all those contracts were made before 1st September 1987.

(4) In applying the [F92 limits] in subsection (3) above, the premiums under any contract for an annuity which was made before 1st June 1984 by a new society shall be brought into account as if the contract were for the assurance of a gross sum.

[F93 (4A) Subsection (4B) below applies to contracts for the assurance of gross sums under [F94 business which is afforded exemption from corporation tax by section 460 if they are] made after 31st August 1987 and before the day on which [F95 the Finance Act 1995] 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 [F96 variation made—

(a) in the period beginning with 25th July 1991 and ending with 31st July 1992, or

(b) in the period beginning with the day on which the Finance Act 1995 was passed and ending with 31st March 1996,

the contract shall, for the purposes of subsection (3) above, be treated, in relation to times when the contract has effect as varied, as made at the time of the variation.]]

(5) In applying the limits in this section there shall be disregarded—

(a) any bonus or addition which either is declared upon assurance of a gross sum or annuity or accrues upon such an assurance by reference to an increase in the value of any investments;

[F97 (b) any policy of insurance or annuity contract by means of which the benefits to be provided under an occupational pension scheme (within the meaning of section 150(5) of the Finance Act 2004) are secured or any annuity contract which constitutes a registered pension scheme or is issued or held in connection with a registered pension scheme other than such an occupational pension scheme;]

(c) any increase in a benefit under a friendly society contract, as defined in section 6 of the M18 Decimal Currency Act 1969, resulting from the adoption of a scheme prescribed or approved in pursuance of subsection (3) of that section; and

(d) so far as concerns the total premiums payable in any period of 12 months—

(i) 10 per cent. of the premiums payable under any contract under which the premiums are payable more frequently than annually; and

(ii) £10 of the premiums payable under any contract made before 1st September 1987 by a [F98 friendly society other than] a new society; and

(iii) so much of any premium as is charged on the ground that an exceptional risk of death is involved.

(6) In applying the limits in this section in any case where a [F99 person has outstanding with one or more societies, branches or companies] one or more contracts made after 13th March 1984 and one or more contracts made on or before that date, any contract for an annuity which was made before 1st June 1984 by a new society shall be regarded not only as a contract for the annual amount concerned but also as a contract for the assurance of a gross sum equal to 75 per cent. of the total premiums which would be payable under the contract if it were to run for its full term or, as the case may be, if the member concerned were to die at the age of 75 years.

(7) A [F100 friendly society [F101 , registered branch or insurance company]] may require a [F102 person] to make and sign a statutory declaration that the total amount assured under outstanding contracts entered into by that [F102 person] with any one or more [F100 friendly societies][F103 , registered branches or insurance companies (taken together)] does not exceed the limits applicable by virtue of this section and that the total premiums under those contracts do not exceed those limits.

Textual Amendments

F86 S. 464(1): first sentence substituted (with effect in accordance with Sch. 12 para. 6(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 12 para. 2(2)

F87 Words in s. 464(3) substituted (with effect in accordance with Sch. 12 para. 6(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 12 para. 2(3)

F88 S. 464(3)(zza) inserted (1.5.1995) by Finance Act 1995 (c. 4), Sch. 10 para. 2(2)

F89 S. 464(3)(za) inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 50, Sch. 9 para. 3(2)

F90 Words in s. 464(3)(za) inserted (1.5.1995) by Finance Act 1995 (c. 4), Sch. 10 para. 2(3)

F91 Words in s. 464(3)(a) inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 50, Sch. 9 para. 3(3)

F92 1990 s.49(3), (4) Previously "Kingdom) contracts under which the total premiums payable in any period of 12 months exceed £100 unless all those contracts were entered into before 1st September 1987" and "limit" respectively

F93 S. 464(4A)(4B) inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 50, Sch. 9 para. 3(4)

F94 Words in s. 464(4A) substituted (with effect in accordance with Sch. 12 para. 6(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 12 para. 2(4)

F95 Words in s. 464(4A) substituted (1.5.1995) by Finance Act 1995 (c. 4), Sch. 10 para. 2(4)

F96 Words in s. 464(4B) substituted (1.5.1995) by Finance Act 1995 (c. 4), Sch. 10 para. 2(5)

F97 S. 464(5)(b) substituted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 35 para. 21 (with Sch. 36)

F98 Words in s. 464(5)(d)(ii) substituted (19.2.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 para. 11(3); S.I. 1993/236, art. 2

F99 Words in s. 464(6) substituted (with effect in accordance with Sch. 12 para. 6(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 12 para. 2(5)

F100 Words in s. 464(7) substituted (19.2.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 para. 11(4); S. I. 1993/236, art. 2

F101 Words in s. 464(7) substituted (with effect in accordance with Sch. 12 para. 6(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 12 para. 2(6)(a)

F102 Words in s. 464(7) substituted (with effect in accordance with Sch. 12 para. 6(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 12 para. 2(6)(b)

F103 Words in s. 464(7) substituted (with effect in accordance with Sch. 12 para. 6(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 12 para. 2(6)(c)

Modifications etc. (not altering text)

C5 S. 464: power to amend conferred (7.2.1994) by 1993 c. 48, ss. 162, 193(2)(3) (with ss. 6(8), 164); S. I. 1994/86, art. 2

Marginal Citations

M18 1969 c. 19.

465 Old societies. U.K.

(1) M19 In this section “old society” means a friendly society which is not a new society.

(2) This section applies if, on or after 19th March 1985, an old society—

(a) begins to carry on tax exempt life or endowment business; or

(b) in the opinion of the Board begins to carry on such business on an enlarged scale or of a new character.

(3) If it appears to the Board, having regard to the restrictions placed on qualifying policies issued by new societies by paragraphs 3(1)(b) F104 . . . and 4(3)(b) of Schedule 15, that for the protection of the revenue it is expedient to do so, the Board may give a direction to the old society under subsection (4) below.

(4) A direction under this subsection is that (and has the effect that) the old society to which it is given is to be treated for the purposes of this Act as a new society with respect to business carried on after the date of the direction.

(5) An old society to which a direction is given may, within 30 days of the date on which it is given, appeal against the direction to the Special Commissioners on the ground that—

(a) it has not begun to carry on business as mentioned in subsection (2) above; or

(b) that the direction is not necessary for the protection of the revenue.

[F105 (6) If a registered friendly society in respect of which a direction is in force under subsection (4) above becomes an incorporated friendly society, the direction shall continue to have effect, so that the incorporated friendly society shall be treated for the purposes of this Act as a new society.]

Textual Amendments

F104 Words in s. 465(3) repealed by Finance Act 1991 (c. 31, SIF 63:1), s. 123, Sch. 19 Pt. V, Note 7

F105 S. 465(6) added (19.2.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 para.12 ; S.I. 1993/236, art.2

Marginal Citations

M19 Source—1985 Sch.10 Part III

[465A F106 Assets of branch of registered friendly society to be treated as assets of society after incorporation. U.K.

(1) This section applies where any assets of a branch of a registered friendly society have been identified in a scheme under section 6(5) of the Friendly Societies Act 1992 (property, rights etc. excluded from transfer to the society on its incorporation).

(2) In relation to any time after the incorporation of the society, the assets shall be treated for the purposes of the Tax Acts as assets of the society (and, accordingly, any tax liability arising in respect of them shall be a liability of the society rather than of the branch).

(3) Where, by virtue of this section, tax in respect of any of the assets becomes chargeable on and is paid by the society, the society may recover from the trustees in whom those assets are vested the amount of the tax paid.]

Textual Amendments

F106 S. 465A inserted (19.12.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 para.13, 22; S.I. 1993/236, art.2

466 Interpretation of Chapter II. U.K.

[F107 [F108 (1) In this Chapter “life or endowment business” means, subject to subsections (1A) and (1B) below—

(a) any life assurance business, and

[F109 (b) any PHI business (as defined in section 431) if—

(i) the contract is one made before 1 September 1996, or

(ii) the contract is one made on or after that date and the effecting and carrying out of the business also constitutes business within paragraphs I, II or III of Part II of Schedule 1 to the Financial Services and Markets Act (Regulated Activities) Order 2001.]]

(1A) Life or endowment business does not include the issue, in respect of a contract made before 1st September 1996, of a policy affording provision for sickness or other infirmity (whether bodily or mental), unless—

(a) the policy also affords assurance for a gross sum independent of sickness or other infirmity;

(b) not less than 60 per cent. of the amount of the premiums is attributable to the provision afforded during sickness or other infirmity; and

(c) there is no bonus or addition which may be declared or accrue upon the assurance of the gross sum.

(1B) Life or endowment business does not include the assurance of any annuity the consideration for which consists of sums obtainable on the maturity, or on the surrender, of any other policy of assurance issued by the friendly society, being a policy of assurance forming part of the tax exempt life or endowment business of the friendly society.]

(2) In this Chapter—

• [F110 F111 “friendly society”, without qualification, means (except in section 459) an incorporated friendly society or a registered friendly society;

• [F110 “gross roll-up business” shall be construed in accordance with section 431;]

• “incorporated friendly society” means a society incorporated under the Friendly Societies Act 1992;]

• [F112 “insurance company” shall be construed in accordance with section 431;]

• F113 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• [F114 “ [F115 long-term] business” shall be construed in accordance with section 431;]

• [F116 “new society” means—

  (a)

  a registered friendly society which was registered after 3rd May 1966 or which was registered in the period of three months ending on that date but which at no time earlier than that date carried on any life or endowment business, or

  (b)

  an incorporated friendly society other than one which, before its incorporation, was a registered friendly society not within paragraph (a) above;]

• F117 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• “policy”, in relation to life or endowment business, includes an instrument evidencing a contract to pay an annuity upon human life;

• [F118 “registered branch” means the same as in the Friendly Societies Act 1992 (and includes any branch that by virtue of section 96(3) of that Act is to be treated as a registered branch);

• “registered friendly society” means the same as in the Friendly Societies Act 1992 (and includes any society that by virtue of section 96(2) of that Act is to be treated as a registered friendly society);]

• F119 . . .

• “tax exempt life or endowment business” has, subject to subsections (7) to [F120 (10A)] of section 460, the meaning given by subsection (2)(d) of that section, that is to say, it means (subject to those subsections) life or endowment business other than business profits arising from which are excluded from subsection (1) of that section by subsection (2)(b) or (c) of that section (read, where appropriate, with subsection (6) of that section);

and references in sections 460 to 465 and this subsection to a friendly society [F121 include, in the case of a registered friendly society, references to any branch of that society].

[F122 (2ZA) F123 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

[F124 (2A) F123 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2B) F123 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(3) M20 It is hereby declared that for the purposes of this Chapter (except where provision to the contrary is made) a [F125 friendly society] formed on the amalgamation of two or more friendly societies is to be treated as different from the amalgamated societies.

(4) A registered friendly society formed on the amalgamation of two or more friendly societies shall, for the purposes of this Chapter, be treated as registered not later than 3rd May 1966 if at the time of the amalgamation—

(a) all the friendly societies amalgamated were registered friendly societies eligible for the exemption conferred by section 460(1); and

(b) at least one of them was not a new society;

or, if the amalgamation took place before 19th March 1985, the society was treated as registered not later than 3rd May 1966 by virtue of the proviso to section 337(4) of the 1970 Act.

[F126 (5) An incorporated friendly society formed on the amalgamation of two or more friendly societies shall, for the purposes of this Chapter, be treated as a society which, before its incorporation, was a registered friendly society registered not later than 3rd May 1966 if at the time of the amalgamation—

(a) all the friendly societies amalgamated were registered friendly societies eligible for the exemption conferred by section 460(1); and

(b) at least one of them was not a new society.]

Textual Amendments

F107 S. 466(1)-(1B) substituted for s. 466(1) (29.4.1996) by Finance Act 1996 (c. 8), s. 171(1)

F108 S. 466(1) substituted (with effect in accordance with s. 38(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 7 para. 43(2) (with Sch. 7 Pt. 2)

F109 S. 466(1)(b) substituted (with effect in accordance with Sch. 18 para. 2(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 18 para. 2(1)

F110 S. 466(2): definition of "gross roll-up business" inserted (with effect in accordance with s. 38(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 7 para. 43(3)(b) (with Sch. 7 Pt. 2)

F111 Definitions in s. 466(2) inserted (19.2.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 para. 14(4); S.I. 1993/236, art. 2

F112 S. 466(2): definition of "insurance company" inserted (29.4.1996) by Finance Act 1996 (c. 8), s. 171(2)(a)

F113 S. 466(2): definition of "life assurance business" repealed (with effect in accordance with s. 38(2) of the repealing Act) by Finance Act 2007 (c. 11), Sch. 7 para. 43(3)(a), Sch. 27 Pt. 2(7), Note (with Sch. 7 Pt. 2)

F114 S. 466(2): definition of "long term business" inserted (29.4.1996) by Finance Act 1996 (c. 8), s. 171(2)(b)

F115 S. 466(2): word in definition of "long term business" substituted (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2000/3629), art. 52(2)(j)

F116 Definition in s. 466(2) substituted (19.2.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 para. 14(5); S.I. 1993/236, art. 2

F117 S. 466(2): definition of "pension business" repealed (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 35 para. 22(2), Sch. 42 Pt. 3, Note (with Sch. 36)

F118 Definitions in s. 466(2) inserted (19.2.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 para. 14(6); S.I. 1993/236, art. 2

F119 Definition of “registrar” in s. 466(2) repealed (1.1.1994) by Friendly Societies Act 1992 (c. 40), s. 120(2), Sch. 22 Pt. I; S.I. 1993/2213, Sch.6 APPENDIX

F120 S. 466(2): word in definition of "tax exempt life or endowment business" substituted (retrospectively) by Finance Act 2007 (c. 11), Sch. 12 paras. 3, 6(1)

F121 Words in s. 466(2) substituted (19.2.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 para. 14(7); S.I. 1993/236, art. 2

F122 S. 466(2ZA) inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 83 (with Sch. 2)

F123 S. 466(2ZA)(2A)(2B) repealed (with effect in accordance with s. 38(2) of the repealing Act) by Finance Act 2007 (c. 11), Sch. 7 para. 43(4), Sch. 27 Pt. 2(7), Note (with Sch. 7 Pt. 2)

F124 S. 466(2A)(2B) inserted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 35 para. 22(3) (as amended by Finance Act 2005 (c. 5), Sch. 9 para. 18(5)-(7)) (with Sch. 36)

F125 Words in s. 466(3) substituted (19.2.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 para. 14(8; S.I. 1993/236, art. 2)

F126 S. 466(5) added (19.2.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 para. 14(9); S.I. 1993/236, art. 2

Modifications etc. (not altering text)

C6 S. 466(2) modified (6.4.1999) by The Individual Savings Account (Insurance Companies) Regulations 1998 (S.I. 1998/1871), regs. 1, 5, 17

C7 S. 466(2) modified (6.4.2005) by The Child Trust Funds (Insurance Companies) Regulations 2004 (S.I. 2004/2680), regs. 1, 4, 15; S.I. 2004/3369, art. 2(1)

Marginal Citations

M20 Source—1970 s.337(4); 1985 s.41(7)(e)