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HMRC internal manual

Company Taxation Manual

Particular bodies: registered societies: payments not distributions

CTA10/S1055 and S1056

The following are specifically not treated as distributions for CT purposes:

Interest and share dividends: CTA10/S1055

This applies to

• interest paid by a registered  society in respect of any mortgage, loan, loan stock or deposit, and

• any sum paid by way of dividend, bonus, interest or otherwise

• that is paid to a shareholder in a registered society, and

• is paid by reference to the shareholder’s holding in the society’s capital.

Both types of payment are treated as interest paid under a loan relationship, see CTM40565 and are paid gross.

Dividend and bonus relating to transactions: CTA10/S1056

This applies to

• a dividend or bonus granted by a registered society, and

• CTA09/S132 (see CTM40515) allows the dividend or bonus to be deducted in computing trading income of the society.

See CTM405890 regarding agricultural and fishing co-operatives.

For details of the treatment of all of these types of payment in the hands of the recipient, see CTM40530 and for details of the returns required to be made by the society in respect of interest and share dividends, see CTM40525.