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LAM17140 | Relevant other business - exemption for friendly societies registered before 1 June 1973 and some later registrations: FA12/S164

From HM Revenue & Customs · Life Assurance Manual

A registered friendly society which is a “qualifying society” is not liable to pay corporation tax (whether on income or chargeable gains) on its profits other than those arising from:

(a) life assurance business, or

(b) PHI business comprised in BLAGAB or eligible PHI business (FA12/S164(1)).

A registered friendly society is a “qualifying society” (provided it does not change the nature or level of its business, see LAM17180). See LAM17170 for other circumstances in which it ceases to be a qualifying society:

  • if it was registered before 1 June 1973 (FA12/S164(2)(a)),

  • if the friendly society is registered on or after 1 June 1973 it may still be a qualifying society if its business is limited to the provision, in accordance with its rules, 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 HMRC Commissioners (FA12/S164(2)(b)), OR

  • if a friendly society is registered on or after 1 June 1973 but before 27 March 1974 and its rules limit the total 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 HMRC Commissioners may authorise for the purposes of this section (FA12/S164(2)(c)).

Exemptions for friendly societies registered before 1 June 1973 will only apply if the society makes a claim (FA12/S164(4)). The claim for exemption from corporation tax should be made in a corporation tax return or by notifying an officer of HMRC.

In applying these tests, a registered friendly society formed on the amalgamation of two or more friendly societies is treated as registered before 1 June 1973 if, at the time of amalgamation, each of the societies amalgamated was a qualifying society. In all other cases it is treated as registered at the date of amalgamation (FA12/S164(3)).

There is a complete exemption for unregistered friendly societies with income of less than £160 per annum (LAM17210).