LAM17060 - Meaning of "exempt BLAGAB or eligible PHI business": FA12/S155

FA12/S155 defines “exempt” BLAGAB or eligible PHI business for the purpose of the part. It also defines what constitutes a non-qualifying business, with any BLAGAB or PHI business outside the “non-qualifying” considered as exempt, subject to an election being made.

The limits for non-qualifying business have varied over time and are set out in the table at FA12/S155(3) (summarised below, with the caveats set out at FA12/S155(4) to (7)).

Contracts to which assurance or annuities relate made	Contracts where the total premium payable in any period of 12 months
on or after 1 May 1995	exceeds £270
on or after 25 July 1991 but before 1 May 1995	exceeds £200
on or after 1 September 1990 but before 25 July 1991	exceeds £150
on or after 1 September 1987 but before 1 September 1990	exceeds £100

In all cases the applicable limit for annuities is an annual amount exceeding £156.

Contracts to which assurance or annuities relate made	Applicable limit
on or after 14 March 1984 but before 1 September 1987	Assurance of gross sums exceeding £750/granting annual annuities exceeding £156 p.a.
before 14 March 1984	Assurance of gross sums exceeding £500 and granting annuities annual amounts exceeding £104. For societies with no provisions for assuring gross sums exceeding £2,000 or granting annuities annual amounts exceeding £416, see LAM17070.

Important further qualifications apply:

• FA12/S171, there is a complete exemption for unregistered friendly societies with income of less than £160 per annum – see LAM17210.

• FA12/S155(4), in applying the limits in the above table in relation to the total premiums payable in any period of 12 months (in the case of contracts made on or after 1 September 1987):

(a) if the premiums are payable more frequently than annually, ignore an amount equal to 10% of the premiums, and

(b) ignore so much of any premium as is charged on the ground that an exceptional risk of death or disability is involved.

In practice, this means that where premiums are payable more frequently than annually, e.g. monthly, for business on or after 1 May 1995 the limit would be increased to £300.

• FA12/S155(5), when applying the limits in the above table, in the case of contracts made on or after 1 September 1987, ignore any bonus or addition declared upon an annuity.

• FA12/S155(6), when applying the limits in the above table, in the case of contracts made before 1 September 1987, ignore any bonus or addition which:

(a) is declared upon the assurance of a gross sum or annuity, or

(b) accrues upon the assurance of a gross sum or annuity by reference to an increase in the value of any investments.

• FA12/S155(7) and (8), in the case of a contract for the assurance of a gross sum under exempt BLAGAB or eligible PHI business made on or after 1 September 1987 but before 1 May 1995, if the amount payable by way of premium under the contract is increased as a result of a variation made:

(a) in the period beginning with 25 July 1991 and ending with 31 July 1992, or

(b) in the period beginning with 1 May 1995 and ending with 31 March 1996

in relation to any profits relating to the contract as varied, the contract is to be treated for the purposes of the above table as made at the time of the variation.