UK Building Societies Act 1986 (Amendment of Small Business Turnover Limit) Order 2024 Published

The Building Societies Act 1986 (Amendment of Small Business Turnover Limit) Order 2024 has been published, together with an explanatory memorandum. The Order amends section 7(10) and (11) of the Building Societies Act 1986 to increase the turnover limit in a relevant financial year for the definition of a small business in section 7(10) of the Act from £1 million to £6.5 million. It also makes a corresponding amendment to the reference to the equivalent limit in any other currency in subsection (11)(c). Under section 7(1) and (2) of the Building Societies Act, subject to some exclusions, building societies are required to raise at least 50 per cent of their funding from members' deposits; the rest can be raised from other sources, known as wholesale funding. Deposits by small businesses with a society, or any subsidiary undertaking of the society, are excluded from the wholesale funding limit by section 7(3)(aa). By amending the definition of a small business in section 7(10) of the Building Societies Act, the Order will exclude a larger range of deposits with building societies by small businesses from the funding limit, thereby providing building societies with greater flexibility in their funding sources. This amendment will also help building societies compete more effectively with ring-fenced retail banks for deposits from small businesses. The proposed new small business turnover limit of £6.5 million is already used to classify the smaller businesses whose deposits must be held within the ringfence. The Order comes into force on November 4, 2024.

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