Permanent Interest Bearing Shares (PIBS)

Regulations were laid on 11th December 2006 to ensure that building societies can continue to issue shares which will be treated as “permanent interest bearing shares” (PIBS) for tax purposes.

The current definition of PIBS for tax purposes is based on the Financial Services Authority’s (FSA) ‘Interim Prudential Sourcebook for Building Societies’. The regulations are needed because the FSA is replacing this (and other) sourcebooks with a ‘General Prudential Sourcebook’ (and other new sourcebooks) with effect from 1st January 2007. The regulations will ensure the continuity of the tax treatment of PIBS.

PIBS are subject to special tax provisions, designed broadly to treat them like securities rather than shares. In particular, a sterling PIBS is subject to the same tax treatment as a “qualifying corporate bond” (QCB). A gain accruing on any disposal of a PIBS is therefore not a chargeable gain for capital gains tax purposes.

Please see the regulations - SI 3291(PDF 29K).