Building societies are permitted to issue a separate form of equity capital. Permanent interest bearing shares (PIBS) are an additional form of core (Tier 1) capital.
PIBS are exempt from tax on capital gains provided that they are denominated in sterling, and there are no capital gains on the issue of PIBS to existing members on preferential terms. The shares were originally brought within the accrued income scheme so that the interest accruing between payment dates was treated as the income of the holder irrespective of any transfer of the securities. Societies obtained relief for the incidental costs of issuing the shares.