Finance Act 1966

29Registered friendly societies carrying on life or endowment business.

(1)Section 440(1) of the [1952 c. 10.] Income Tax Act 1952 (which, as applied, and extended to tax on chargeable gains, by the Corporation Tax Acts confers an exemption from tax on friendly societies) shall not apply to profits arising from life or endowment business unless that business satisfies the conditions in Part I of Schedule 8 to this Act, and so far as the said section 440(1) relates to profits arising from life or endowment business it shall not exempt—

(a)a friendly society registered after 31st December 1957 which at any time in the period of three months ending on 3rd May 1966 entered into any transaction in return for a single premium, being a transaction forming part of its life or endowment business, or

(b)subject to subsections (2) and (3) below, a friendly society registered after 3rd May 1966, or a friendly society which was registered in the period of three months ending on 3rd May 1966 but which at no time earlier than 3rd May 1966 carried on any life or endowment business.

(2)Subsection (1)(b) above shall not apply to a friendly society if, by the rules of the society, the only life or endowment business which it may carry on is—

(a)industrial assurance business as defined in section 1(2) of the [1923 c. 8.] Industrial Assurance Act 1923,

(b)assurance affording provision for sickness or other infirmity, whether bodily or mental, which is also assurance for a gross sum independent of sickness or other infirmity, where not less than sixty per cent. of the amount of the premiums is attributable to the provision afforded during sickness or other infirmity, and no bonus or addition may be declared upon the assurance of the gross sum, or

(c)contracts exclusively for the assurance of a gross sum or annuity payable on death to or for the benefit of the deceased's widow or dependent child,

or business which falls within any two or all three of paragraphs (a), (b) or (c) above taken together.

(3)Subsection (1)(b) above shall not apply to any part of a friendly society's tax exempt life or endowment business which it acquires by way of transfer of engagements or amalgamation from another friendly society, and which consists of business relating to contracts made not later than the time of transfer or amalgamation.

(4)The limits of £500 and £104 in the proviso to section 8(1), and in section 41, of the [1896 c. 25.] Friendly Societies Act 1896 (which restrict the life assurance and annuity business which a registered friendly society may transact either generally or with any one person) shall be increased in accordance with Part II of Schedule 8 to this Act, and so much of section 440(1) of the [1952 c. 10.] Income Tax Act 1952 as applies limits of those amounts shall cease to have effect, but the said section 440(1) shall not apply to profits arising from life or endowment business consisting of the assurance of gross sums exceeding £500 or of the granting of annuities of annual amounts exceeding £104.

In applying the said limits of £500 and £104 any bonus or addition declared upon assurance of a gross sum or annuity shall be disregarded.

(5)Subject to the said section 440(1) of the Income Tax Act 1952, the Corporation Tax Acts shall apply to the life or endowment business carried on by registered friendly societies in the same way as they apply to mutual life assurance business carried on by assurance companies, so however that the Treasury may by regulations contained in a statutory instrument subject to annulment in pursuance of a resolution of the Commons House of Parliament 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.

(6)If a friendly society registered not later than 3rd May 1966 begins after that date to carry on tax exempt life or endowment business or, in the opinion of the Chief Registrar of Friendly Societies, begins to carry on tax exempt life or endowment business on an enlarged scale, or of a new character, and it appears to the Chief Registrar, having regard to the restrictions placed on friendly societies registered after the said date by subsection (1)(b) of this section, that for the protection of the revenue it is expedient to do so, he may serve a notice on the friendly society referring to the provisions of this subsection and stating that he is considering the question whether, for the protection of the revenue, it is expedient to give a direction that, as from such date as may be specified in the notice, being the date when in the opinion of the Chief Registrar the relevant change in the society's activities took place, the society is to be treated as one within subsection (1)(b) of this section, and—

(a)he shall consider any representations or undertakings made or offered to him by the friendly society within the period of one month from service of the notice, and if the society so requests shall afford it an opportunity of being heard by him not later than three weeks after the end of that period of one month,

(b)if after consideration of any such representations or undertakings, he remains of opinion that it is expedient to do so, direct that the society shall, subject to any further direction given by him cancelling that direction, be treated for the purposes of this section as a friendly society registered after 3rd May 1966, but subject to the like right of appeal as is conferred by section 77(6) of the [1896 c. 25.] Friendly Societies Act 1896 on cancellation of registration.

In the application of this subsection to Scotland for references to the Chief Registrar of Friendly Societies there shall be substituted references to the assistant registrar for Scotland.

(7)Nothing in this section shall affect the exemption conferred by section 440(1) of the [1952 c. 10.] Income Tax Act 1952 on unregistered friendly societies.

(8)In this section and Schedule 8 to this Act " life or endowment business " means any business within section 8(1)(b) or (d) or (dd) of the Friendly Societies Act 1896 (life insurance and endowments and insurance of money payable on the duration of a life for a specified period) and any other business within the definition of " life assurance business" in section 33(1) of the [1958 c. 72.] Insurance Companies Act 1958 but—

(a)shall include business within section 8(1)(a) of the Friendly Societies Act 1896 for the relief or maintenance of any person in old age (meaning any age after fifty),

(b)shall not include the granting of any such annuities as are referred to in section 26(1) of the [1956 c. 54.] Finance Act 1956 (retirement annuities, etc.),

(c)shall 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.

(9)In this section and the said Schedule—

• " tax exempt life or endowment business " means life or endowment business other than business profits arising from which are excluded from section 440(1) of the [1952 c. 10.] Income Tax Act 1952 by subsection (4) of this section.

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

and references in this section and the said Schedule to a friendly society include references to any branch of that friendly society.

(10)It is hereby declared that for the purposes of this section and the said Schedule a registered friendly society formed on the amalgamation of two or more friendly societies shall be treated as different from the amalgamated societies:

Provided that—

(a)the society shall be treated as registered not later than 3rd May 1966 if at the time of the amalgamation all the friendly societies amalgamated were societies which, subject to satisfying the conditions of Part I of Schedule 8 to this Act, were eligible for the exemption conferred by section 440(1) of the Income Tax Act 1952 in respect of life or endowment business and at least one of them was a society not within subsection (1)(b) of this section,

(b)in determining, as respects a society resulting from an amalgamation and coming within subsection (6) of this section by virtue of proviso (a) above, the questions in that subsection in the period immediately following the amalgamation, the activities of the amalgamated societies in the period immediately preceding the amalgamation shall be treated as if they were the activities then being carried on by the society resulting from the amalgamation.

(11)This section has effect for corporation tax for the financial year 1966 and later financial years and for income tax for the year 1966-67 and later years of assessment, but nothing in this section shall withdraw exemption under section 440(1) of the [1952 c. 10.] Income Tax Act 1952 for profits arising from any part of a life or endowment business relating to contracts made not later than 3rd May 1966.

(12)In the application of this section and the said Schedule to a friendly society which is for the time being registered or deemed to be registered in Northern Ireland under the enactments relating to friendly societies in Northern Ireland—

(a)for references to section 1(2) and section 24 of the [1923 c. 8.] Industrial Assurance Act 1923 there shall be substituted references to section 1(2) and section 24 respectively of the [1924 c. 21 (N.I.).] Industrial Assurance Act (Northern Ireland) 1924,

(b)for references to the [1896 c. 25.] Friendly Societies Act 1896 or to any provision of that Act there shall be substituted references to that Act or provision as it applies in Northern Ireland,

(c)for the reference in paragraph 1(1)(c) of the said Schedule to section 3 of the [1929 c. 28.] Industrial Assurance and Friendly Societies Act 1929 there shall be substituted a reference to the [1929 c. 8 (N.I.).] Industrial Assurance and Friendly Societies Act (Northern Ireland) 1929,

(d)for the reference to section 33(1) of the [1958 c. 72.] Insurance Companies Act 1958 there shall be substituted a reference to section 1(a) of the [1909 c. 49.] Assurance Companies Act 1909,

(e)for references to the Chief Registrar of Friendly Societies there shall be substituted references to the registrar having corresponding functions under the law of Northern Ireland, and so that any power exercisable by the Chief Registrar with the consent of the Treasury shall be exercisable by that registrar with the consent of the Ministry of Commerce of the Government of Northern Ireland,

and nothing in this section or the said Schedule shall restrict the powers of the Parliament of Northern Ireland to make laws with respect to any matter with respect to which that Parliament has power to make laws.