Taxation of Chargeable Gains Act 1992 section 217B

Rights of members in registered society equated with rights in incorporated society

Section 217B ensures that when a registered friendly society incorporates under the Friendly Societies Act 1992, the conversion of members' rights from the old registered society into rights in the new incorporated society does not trigger any capital gains tax consequences.

• When a registered friendly society incorporates under the Friendly Societies Act 1992, members of the old society automatically become members of the new incorporated society — this is referred to as a "change of membership".
• The change of membership is not treated as a disposal or acquisition of an asset for capital gains tax purposes, so no chargeable gain or allowable loss arises at that point.
• All interests and rights a member holds in the incorporated society after the change are treated as a single asset, deemed to have been acquired at the time the member first acquired rights in the original registered society.
• Any additional interests or rights the member acquired in the registered society over time before incorporation are treated as additions to that same single asset, preserving the original acquisition history for future capital gains calculations.