Corporation Tax Act 2009

131 Incidental costs of issuing qualifying shares U.K.

(1) In calculating the profits of a trade carried on by a building society, a deduction is allowed for incidental costs of obtaining finance by means of issuing shares in the society if—

(a) the shares are qualifying shares for the purposes of section 117(4) of TCGA 1992, and

(b) the condition in subsection (2) is met.

(2) The condition is that the amount of any—

(a) dividend or other distribution, or

(b) interest,

payable in respect of the shares is deductible in calculating, for corporation tax purposes, the profits of the society's trade.

(3) But a deduction is not allowed by virtue of subsection (1) so far as the costs fall to be brought into account as debits for the purposes of Part 5 (loan relationships).

(4) “Incidental costs of obtaining finance” means expenses—

(a) which are incurred on fees, commissions, advertising, printing and other incidental matters, and

(b) which are incurred wholly and exclusively for the purpose of obtaining the finance, providing security for it or repaying it.

(5) Expenses incurred wholly and exclusively for the purpose of—

(a) obtaining finance, or

(b) providing security for it,

are incidental costs of obtaining the finance even if it is not in fact obtained.

(6) But the following are not incidental costs of obtaining finance—

(a) sums paid because of losses resulting from movements in the rate of exchange between different currencies,

(b) sums paid for the purpose of protecting against such losses,

(c) the cost of repaying qualifying shares so far as attributable to their being repayable at a premium or having been issued at a discount, and

(d) stamp duty.