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Building Societies

Volume 114: debated on Thursday 23 April 1987

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asked the Chancellor of the Exchequer whether he proposes to make any changes to the income tax regulations for building societies.

Three minor changes will be made to the regulations which govern the building societies "composite rate" tax scheme. These changes will enable building societies to pay interest gross to depositors in the following limited circumstances:

  • On certificate of deposit of £50,000 or more with a duration of between one and five years.
  • On time deposits of £50,000 or more in a foreign currency.
  • On deposits by a subsidiary of a building society with its parent society.
The first two changes mean that the tax treatment of certificates of deposits and time deposits issued by a building society will mirror that which already applies to similar deposits with banks. The other change will ensure that interest paid by a building society to its subsidiary is treated in the same way as interest paid by a company to its subsidiary.A statutory instrument will be laid before the House as soon as possible, and the changes will apply to interest paid on or after 1 June 1987.