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HMRC internal manual

Company Taxation Manual

HM Revenue & Customs
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Particular bodies: loan and money societies: thrift funds

Thrift funds are incorporated or unincorporated savings clubs.  Members place deposits, usually of a modest nature, with the organisation on a regular (often weekly or monthly) basis.  The deposits are usually returned to the members, sometimes with the addition of an interest payment or dividend arising from the investment of the funds, at the end of the relevant accounting period.

Holiday clubs, Christmas clubs and ‘tontines’ are kinds of thrift funds.  A ‘tontine’ is an arrangement whereby each subscriber pays a sum into a fund and in return receives dividends from the capital invested.  When a subscriber dies his or her share is divided amongst surviving subscribers.  The pattern is repeated until such time as only one subscriber remains alive.  Tontines are now illegal in the UK.

Periods ending on or before 31 March 2001

For accounting periods ended on or before 31 March 2001, ESCC3 allowed thrift funds to be treated as outside the scope of CT.

Periods ending on or after 1 April 2001

ESCC3 was withdrawn for periods ended on or after 1 April 2001.

For these periods thrift funds are treated as companies for tax purposes and are chargeable to CT on any profits in the normal way.

Head Office responsibility for thrift funds lies with CTIS (Technical).