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HMRC internal manual

Company Taxation Manual

Particular bodies: registered societies: share and loan interest paid: the society

CTA09/S499

Both share interest and loan interest paid by a registered society are treated as interest paid under a loan relationship.

This should be obvious for a payment made in respect of any mortgage, loan, loan stock or deposit.

Any dividend, bonus or other sum payable to a shareholder in a registered society is treated for CT purposes as a loan relationship within CTA09/PART5 if it is paid by reference to the shareholder’s share capital holding (CTA09/S499).

Where this latter rule applies, to the extent that the shareholder’s holding is held for the purposes of a trade, the shareholder is treated for loan relationship purposes accordingly (CTA09/S499 (2) – this was a minor Tax Law Rewrite clarification)

Both share and loan interest are paid gross to the recipient, ITA07/S887. The society must however make a return of some of the payments, for details see CTM40525.