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HMRC internal manual

Company Taxation Manual

HM Revenue & Customs
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Building societies: application of CT: mergers

There are two ways in which building societies can merge under the Building Societies Act 1986:

  • in an amalgamation, two or more societies combine to establish a single new society which succeeds to their trades,
  • in a transfer of engagements, one society transfers all or part of its business to another society.

On a merger, the ceasing society’s income should be calculated as if its trade was discontinued, whether or not that is the case.

Investments which are loan relationships of:

  • both societies on an amalgamation, and
  • the transferor society on a transfer of engagements,

will be taken into account on an accruals basis at the date of cessation. The transferee society will acquire those assets at the same value.

Any transfers of chargeable assets from one society to another on a merger are deemed to take place on a no gain no loss basis. This means that the consideration for the disposal is deemed to be an amount which gives rise to neither a gain nor a loss in the hands of the society making the disposal (see CG41000).

Unrelieved capital losses cannot be transferred to the successor society.