CTM40805 - Particular bodies: loan and money societies: general
There are only a very small number of loan and money societies still in existence, and no new societies can be incorporated. Loan and money societies are either:
- 'specially authorised', meaning they are registered under Section 8 (5) of the Friendly Societies Act 1896, for a purpose authorised by the Treasury, or
- incorporated under the Companies Act 1948.
These societies are within the charge to CT.
Accounting periods ending on or before 31 March 2001
For accounting periods ended on before 31 March 2001 loan and money societies were able to adopt ESCC2 (now obsolete). A society that adopted the concessional procedure was charged to CT in a similar way to building societies (see CTM49100 onwards). This meant that dividends and interest paid to members were:
- not regarded as distributions under ICTA88/S209 and ICTA88/S418,
- grossed up at the average rate which was in force for the year ending 5 April when the accounting period ended, and
- allowed as a deduction for that period.
The society accounted for IT on the income it distributed to its members at an average rate on the grossed up amount of dividends and interest paid after taking into account members' contributions to management expenses. The 'average rate' was the average rate of tax which could be applied to the investors, estimated on a reasonable basis.
IT deducted from the income societies received was set off against CT liability for the corresponding period.
Accounting periods ending on or after 1 April 2001
ESCC2 was withdrawn for accounting periods ended on or after 1 April 2001. Since that date, loan and money societies have been subject to the same corporation tax rules as other companies.
Head Office responsibility for loan and money societies lies with CTIAA (Technical).
