Taxation of Chargeable Gains Act 1992 section 216

Assets transferred from society to company

Section 216 deals with the capital gains tax consequences when a building society transfers its entire business to a successor company under the Building Societies Act 1986, providing relief from charges on the transfer itself while preserving certain anti-avoidance rules when companies later leave the successor's group.

• Where the building society and the successor company are not in the same group, assets transfer on a no gain/no loss basis for corporation tax on capital gains purposes, so no immediate tax charge arises on the transfer.
• If any company leaves the building society's group because of the transfer, or if the society and the successor company are initially in the same group but later separate, the degrouping charge under section 179 is switched off for assets previously acquired within the group.
• However, if a company that was in the building society's group moves into the successor company's group and later leaves that group, a degrouping charge under section 179 can arise on assets originally acquired from the society or its fellow group members, as though those assets had been acquired from the successor company.
• An exception to this degrouping charge applies where the company that acquired the asset and the company from which it was acquired (one being a 75 per cent subsidiary of the other) leave the successor company's group simultaneously but remain in the same group as each other.