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HMRC internal manual

Business Income Manual

Meaning of trade: mutual trading and members clubs: mutual associations: specific activities: mutual health insurers: background

The majority of mutual health insurers are what is known as ‘voluntary mutuals’, or ‘contributory’ funds. They have their origin in the so-called ‘Saturday funds’, which began to be set up in the 1870s.

The Saturday funds were originally set up to support local voluntary hospitals. Contributors were assured of free medical treatment. They were called ‘Saturday funds’ because in those days workmen were paid on a Saturday and it was then that they made their contributions. Over the years the business evolved into what became largely the provision of pecuniary loss insurance.

The main characteristics of the typical fund are:

  • it is locally based, often having strong and at times venerable local tradition.
  • local dignitaries usually support it.
  • it has set up a charitable trust. The fund makes payments to the trust by gift aid. The payments support mainly local health and welfare charities. There is guidance on ‘profit shedding’ by gift aid payments at CTM40065.

There are a number of large insurers who offer much more than pecuniary loss insurance. These insurers are typically more commercially orientated.