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Methods of effecting building society mergers

There are long-standing tax reliefs available to cover transfers of a trade between companies, often including anti-avoidance provisions. These are wide ranging and include, for instance, transfer of trading losses and continuity of capital allowances. They will usually be unavailable to mutual bodies (ie building societies, registered societies (formerly industrial and provident societies), or friendly societies) because the latter may not fall within the necessary definition of a company and because a degree of common ownership may be required between transferor and transferee.

Specific regulations ensure that the tax rules applying to mergers of mutuals are now the same, regardless of the type of merger¹.

There are several ways in which building societies can merge/transfer their trade (referred to as relevant transfers²):

1. Ìý

   •ÌýÌýÌýÌý in an amalgamation (under the Building Societies Act 1986, s 93) where two or more societies combine to establish a single new society which succeeds to their trades

2. Ìý

   •ÌýÌýÌýÌý in a transfer of engagements (under the Building Societies Act 1986,