Treasury widens door to friendly society purchase

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The Treasury is changing the rules governing the status of friendly society investment plans so policyholders are not penalised if the business is transferred to another insurance company.

According to a note issued yesterday by HM Revenue & Customs as part of the 2006 Pre-Budget Report, friendly society policyholders can hold onto the tax-exempt status of their life or endowment policies in situations where business is “transferred” to another friendly society, but would lose that tax-exempt status if the business was transferred to an insurance company. HMRC’s PBR note 10 states: “Under current law, if such tax-exempt policies are transferred to another friendly society, they retain their tax-exempt status. However, on transfer of business to an insurance company, the b...

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