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HMRC internal manual

Company Taxation Manual

Building Societies: application of CT: income from property

Rents and other receipts from property, and the deductions from rents and receipts, are calculated and assessed in accordance with CTA2009/Part 4.

The above treatment does not apply to mortgaged properties:

  • which are in the possession of the society as mortgagee,
  • for which the society has appointed a Receiver.

Any rents receivable and outgoings payable in respect of these properties should be excluded from the computation of Schedule A liability of the society. This is because the society may hold the property but the mortgagor remains the legal owner. Once the society has become absolutely entitled to the property as against the mortgagor any rents and other receipts are assessable on the society in the normal way.

The amount of mortgage interest credited to the ‘income and expenditure account’ in respect of these properties should be included in the trading profit assessable under Case I. If the full amount of interest is not credited, any excess eventually received, for example on the sale of the property, should be included in the Case I computation for the accounting period in which it is received.

Where any liability arises under Case VI of Schedule D or Schedule A in respect of these properties, the society is assessable as mortgagee.

However, the liability should be computed by reference to the mortgagor’s income.