Restrictions have been placed on how banks and building societies can offset their accumulated carried forward trading losses, management expenses and non-trading loan relationship deficits. From 1 April 2015, relief for these losses has been restricted to 50% of their taxable profits.
In calculating the amount of taxable profit that can be offset by the carried forward losses, building societies, established under the Buildings Societies Act 1986, are first able to apply a £25million allowance.
A similar allowance will be introduced for savings banks established under the Savings Bank (Scotland) Act 1819, in light of their similar characteristics to building societies. This allowance will be available for such banks as from 1 April 2015.
This change will only affect savings banks established under the Savings Bank (Scotland) Act 1819 and is expected to have a negligible impact on Treasury revenue.