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HMRC internal manual

Company Taxation Manual

Particular bodies: housing associations: co-operatives - disqualifying letting

CTA10/S647 (3)

A housing association (CTM40405) may be disqualified from relief under CTA10/S642 (CTM40420) if there is letting:

  1. by the association to non-members,


  1. by a member to a non-member.

In the case of 1. above, the association should be asked for an explanation if, as is likely, such letting is not permitted by its rules.  A report should be made to CTIS (Technical) including an estimate of the probable rental income arising on the rents from non-members.

In the case of 2. above, the official letter of approval issued to the association (CTM40425)

specifies the limited extent to which sub-letting by members will be permitted.  If this limit is exceeded advice should be sought from CTIS (Technical).

Where it is agreed that the requirements of CTA10/S647 (3) have been substantially complied with the rents from non-members will be taxable under the normal property income rules. The interest paid in respect of a property let to a non-member will not be within CTA10/S642 and the loan relationship provisions will apply.