LAM17030 - Summary of friendly society long-term business provisions: FA12/PART3/S150-179
Registered, unregistered and incorporated friendly societies are subject to corporation tax. The Corporation Tax Acts use the term “company” to apply not only to companies but also to unincorporated associations (such as unregistered and registered friendly societies) and bodies corporate that are not companies (such as incorporated friendly societies) (CTA10/S1121).
The main long-term business provisions are:
| Reference FA12 | Summary | LAM Reference |
|---|---|---|
| S151 | CT rules apply to friendly societies as for mutual life assurance companies subject to exemptions and regulations (SI2012/3008) | LAM17020 |
| S152 | Friendly societies subject to transfer of business rules | LAM13090 |
| S153 | Exemption for certain BLAGAB or eligible PHI business | LAM17040 to 17150 |
| S158 | BLAGAB and eligible PHI - transfers from friendly societies to insurance companies etc. | LAM17160 |
| S164 | Societies registered before 1 June 1973 etc. | LAM17140 |
| S165 | Incorporated friendly societies - a special exemption from corporation tax for “relevant other business” | LAM17150 |
| S166 | Relevant other business - transfers from friendly societies etc. | LAM17160 |
| S167 | Relevant other business - transfers between friendly societies | LAM17170 |
| S171 | An exemption for unregistered friendly societies with income of less than £160 per annum | LAM17210 |
Key terms are defined in the body of the text as they arise and in FA12/S172.
Other provisions in this manual particularly relevant to friendly societies in calculating the tax charge are:
LAM06060 - I-E Profit: Calculation of the tax charge: No reliefs to be given against the policyholders’ share of I-E profits FA12/S127
LAM07010 - Trade profits: Introduction - BLAGAB and non-BLAGAB trade profits and losses: FA12/S66
LAM13090 - Transfers of long-term business: friendly societies: FA12/S152
There is further guidance on the taxation of friendly societies in the following manuals:
General Insurance Manual: GIM1200 - The UK Market: friendly societies
Capital Gains Manual: CG41600 to CG41614
Company Taxation Manual: CTM40305 to CTM40345
Insurance Policyholder Taxation Manual: IPTM8400
VAT Registration guidance: VATREG11200
The I-E treatment of mutual business: LAM02050
Trading profits on long-term insurance business carried out on a mutual basis are not subject to corporation tax under normal principles and explicit reference is made in FA12/S71(3) to excluding mutual business profits from the charge to corporation tax as non-BLAGAB.