Corporation Tax Act 2009 section 40

Credit unions

Section 40 ensures that the core activities of a credit union — lending to members and investing surplus funds — are not treated as carrying on a trade for the purposes of calculating the credit union's income.

• When a credit union makes loans to its members, this activity is not treated as a trade or part of a trade for income calculation purposes
• When a credit union invests its surplus funds (whether by placing them on deposit or otherwise), this is likewise not treated as trading activity for income purposes
• Surplus funds are defined as funds not immediately required for the credit union's purposes
• The rule applies only to income calculations — if trading status is relevant for other tax purposes (such as chargeable gains), and the credit union is in fact trading, this section does not alter that position