CTM40330 | Particular bodies: friendly societies: pension business

Position before 1 January 2013

Pension business was outside the scope of the exemption for life or endowment business, irrespective of the level of premium (ICTA88/S460 (2)(b)). It could therefore give rise to profits chargeable to Corporation Tax.

Individual Savings Account (ISA) business and Child Trust Fund (CTF) business were also outside the scope of the exemption for life or endowment business, irrespective of the level of premium (ICTA88/S460 (2)(ba)) and could give rise to profits chargeable to CT.

For accounting periods beginning on or after 1 January 2008 and ending on or after 12 March 2008, pension, CTF, ISA and overseas life assurance business categories were taxed as a single category called gross roll up business (ICTA88/S460 (2)(ba)). This remained outside the exemption for life or endowment business and so could give rise to profits chargeable to CT.

Position on or after 1 January 2013

Although protection, pension, CTF, ISA and overseas life assurance businesses are all separately defined in statute, from 1 January 2013 these business categories are all taxed, along with permanent health insurance, as part of a single category, referred to as non-BLAGAB: FA12/S68.

The profits of non-BLAGAB are charged as profits of a trade under CTA09/S35. It follows for a mutual insurer that non-BLAGAB is not chargeable to CT. Friendly societies attract the same treatment.