Corporation Tax Act 2009 section 131

Incidental costs of issuing qualifying shares

Section 131 allows building societies a tax deduction for the incidental costs of issuing certain qualifying shares, provided the dividends or interest on those shares are themselves deductible for corporation tax purposes.

• Building societies may deduct the incidental costs of raising finance through issuing qualifying shares, where the dividends, distributions or interest on those shares are deductible in computing trade profits for corporation tax
• Incidental costs include fees, commissions, advertising, printing and similar expenses incurred wholly and exclusively to obtain the finance, provide security for it or repay it — and the deduction is available even if the finance is ultimately not obtained
• The deduction does not apply where the costs are already accounted for under the loan relationships rules in Part 5 of the Act, which cover most building society share issues
• Certain items are specifically excluded from the definition of incidental costs: foreign exchange losses and hedging costs, any premium or discount element on repayment of qualifying shares, and stamp duty