CFM71060 - Other tax rules on corporate finance: building society transfers of business

Building societies: transfers of business or engagements

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 (section 93),
• in a transfer of engagements, one society transfers all or part of its business to another society (section 94).

A building society may also transfer the whole of its business to a public limited company under section 97 of the Building Societies Act 1986.

The Building Societies (Funding) and Mutual Transfers Act 2007 allows the Treasury, by order, to make such modifications of the transfer provisions under section 97 as it thinks appropriate to facilitate the transfer of the whole of the business of a mutual society (the transferor) to a subsidiary company of a mutual society (whether or not of the same type) (the transferee).

A mutual society for the purposes of the 2007 Act is:

• a building society incorporated or deemed to be incorporated under the Building Societies Act 1986
• a friendly society within the meaning of the Friendly Societies Act 1992
• an industrial and provident society registered or deemed to be registered under the Industrial and Provident Societies Act 1965
• an EEA mutual society

The Treasury has used these powers to facilitate building societies transferring the whole of their business to the subsidiary company of another mutual society (The Mutual Societies (Transfers) Order 2009 SI2009/509).

The tax consequences of transfers of business by mutual societies are dealt with in the Mutual Societies (Transfers of Business) (Tax) Regulations 2009 (SI2009/2971), and updated by the Mutual Societies (Transfers of Business) (Tax) (Amendment) Regulations 2024 (SI2024/555). See CTM49620 for the CT consequences of such transfers.