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HMRC internal manual

Banking Manual

Bank loss restriction: carried forward reliefs outside the restriction: allowance for building societies - allocation of allowance within building society group


Building societies receive an amount of £25,000,000 of allowance, which can be used to designate relevant carried-forward losses as unrestricted for the purposes of the bank loss restriction (but not for the purposes of the general loss restriction) (BKM306700).  This is the building society’s initial allowance.

The building society can allocate an amount of its £25,000,000 allowance under CTA10/S269CI to any of its subsidiary banking companies in its group.  That subsidiary can then use the allowance to designate an amount of relevant losses as unrestricted (for the purposes of the bank loss restriction) in its tax return. 

Only a building society may make an allocation. 

The allocation must be supported by the submission of a statement of allocation to HM Revenue & Customs by the building society.  The statement must include:

  • The amount of carried-forward loss allowance the building society had immediately before the allocation (this will be the amount of initial allowance the building society has which it has not already allocated out or used itself through designation)
  • The companies to which the allocation is made and the amount of allowance allocated to each of them
  • The new total amount of allowance now allocated by the building society.

The statement must be submitted to HM Revenue & Customs at or before the submission of the first tax return or amendment to a tax return in which any banking company in the group next makes a designation.

An officer of Revenue & Customs may accept a later statement of allocation as valid.  This will be in accordance with the principles of SP5/01 (CTM97065).

The building society may make multiple allocations with the effects stacking.  Each allocation is fixed unless a re-allocation is made under CTA10/S269CJ (see BKM306850).

The allowance is not tied to an accounting period until designated.  If a company received an allocation of allowance after the end of a given accounting period but was still in time to submit or amend its tax return for that accounting period it could still claim the allowance for that period.  Amendment includes amendment of a return at the conclusion of an enquiry.

This allowance is entirely separate from the deductions allowance used in calculating the general loss restriction (see BKM305500).