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HMRC internal manual

Stamp Duty Land Tax Manual

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HM Revenue & Customs
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Reliefs: Demutualisation of insurance company

General overview and definitions FA03/S63

This section provides relief from Stamp Duty Land Tax where a land transaction takesplace in connection with the transfer of the business of a mutual insurance company to alimited company. It extends the relief from stamp duty in FA97/S96 to Stamp Duty Land Tax.

Demutualisations of mutual insurance companies occur for many reasons. The rights of theowners of the mutual company are given up in return for shares in a company that acquiresthe business of the mutual or that is a wholly owned subsidiary of the mutual.

The definitions of terms used in this guidance that apply to this relief are as follows

  • contract of insurance has the meaning given by Article 3(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001
  • employee in relation to a mutual insurance company of it’s wholly-owned subsidiary, includes any officer or director of the company or subsidiary and any other person taking part in the management of the affairs of the company or subsidiary
  • general insurance company means a company that has permission under Part 4 of the Financial Services and Markets Act 2000, or paragraph 15 of Schedule 13 to that Act (as a result of qualifying for authorisation under paragraph 12(1) of that Schedule), to effect or carry out contracts of insurance
  • insurance company means a company that carries on the business of effecting or carrying out contracts of insurance
  • insurance business transfer scheme has the same meaning as in Part 7 of the Financial Services and Markets Act 2000
  • the life assurance Directive means the Council Directive of 5th November 2002 concerning life assurance
  • mutual insurance company means an insurance company carrying on business without having any share capital
  • the 3rd non-life insurance Directive means the Council Directive of 18th June 1992 on the co-ordination of laws, regulations and administrative provisions relating to direct insurance other than life insurance and amending Directives 73/239/EEC and 88/357/EEC
  • pensioner in relation to a mutual insurance company or its wholly owned subsidiary, means a person entitled (whether presently or prospectively) to a pension, lump sum, gratuity or other like benefit referable to the service of any person as an employee of the company or subsidiary
  • A company is the wholly-owned subsidiary of another company (the parent) if the company has no members except the parent and the parent’s wholly owned subsidiaries, or persons acting on behalf of the parent or the parent’s wholly owned subsidiaries