Schedule 18
Finance Bill
6:00 pm
Kitty Ussher (Economic Secretary, HM Treasury; Burnley, Labour)
I am coming to that. Under current law, a friendly society may have taxable or tax-exempt other business, but not both. However, schedule 18 allows the transfer of other business between friendly societies without its impacting on the taxable or tax-exempt status of a transferred business. That means that it will become possible for a friendly society to have both taxable or tax-exempt other business.
Currently, there are no rules to divide income gains, losses or expenses between taxable or tax-exempt other business. Schedule 18 includes a regulation-making power to allow those rules to be made. However, the HMRC solicitor drawing up the regulations to do this has advised that the regulation-making power is insufficient to cover all situations. Therefore, Government amendment No. 117 strengthens the regulation-making power included in schedule 18, and Government amendment No. 118 extends the existing regulation-making power in section 463 of the Income and Corporation Taxes Act 1988, so that all situations are now covered.
The hon. Gentleman asked for examples of taxable or tax-exempt business. Sickness policies are an example of taxable business.