IPTM8450 - Friendly society tax exempt policies: policies that are from an 'old' society

Meaning of an old friendly society

The definition of an ‘old society’ is given in FA12/S161. It means:

  • a registered friendly society registered before 4 February 1966,
  • a registered friendly society registered in the three months ended 3 May 1966 which carried on any life or endowment business on or before 3 May 1966, or
  • an incorporated friendly society which, before its incorporation, was a registered friendly society falling in either of the two bullets above.

Minimum capital sum tests for policies from old societies

IPTM8420 describes the general tests that the capital sum from a tax exempt policy on various contingencies needs to meet in order for the policy to qualify. There is a slight variation to the general test where the tax exempt policy is from an old friendly society.

In particular, for contracts made before 1 September 1987, an amount equal to £10 per year must be disregarded in considering the premiums payable (FA12/S161(3)).