Commentary

D7.604 BLAGAB or eligible PHI —conditions for exemption

Corporate tax
Corporate tax | Commentary

D7.604 BLAGAB or eligible PHI —conditions for exemption

Corporate tax | Commentary

D7.604 BLAGAB or eligible PHI —conditions for exemption

Subject to the exclusions set out in D7.605, the funds underlying life policies and annuities constituting life or endowment business are exempt from tax, provided:

  1.  

    (a)     the relevant investment limits are not exceeded. The limits apply to individual contracts and also to the total contracts which a member has outstanding (see D7.614); or

  2.  

    (b)     for contracts made before 14 March 1984, the society's rules did not allow it to carry on life or endowment business consisting of the assurance of gross sums exceeding £2,000 or the grant of annuities in excess of £416 a year.

The exemption extends to income tax and corporation tax (whether on income or chargeable gains) on the profits of the society1. The exemption applies only if the society makes a claim2. In practice, this usually means submitting a tax return showing that business as not being taxed.

The exemption applies only to friendly societies as defined for this purpose, that is those which are registered or incorporated3. Other societies enjoy complete exemption on making a claim only if their income does not exceed £160 a year4. It is unclear whether this limit includes contribution or premium income, nor is it known whether there are in force any such claims.

Investment limits

The exemption applies if the relevant

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