Corporation Tax Act 2009 section 499

Industrial and provident society payments treated as interest under loan relationship

Section 499 explains how certain payments made by registered societies and UK agricultural or fishing co-operatives to their shareholders are treated as interest under a loan relationship for corporation tax purposes.

• Dividends, bonuses, or other sums paid to shareholders of registered societies or UK agricultural/fishing co-operatives are treated as interest under a loan relationship if the payment is calculated by reference to the shareholder's holding in the society's or co-operative's share capital.
• Where the shareholder holds their shares for trade purposes, they are treated as a party to that loan relationship for trade purposes; where held for any other purpose, they are treated as a party to it for that other purpose.
• A UK agricultural or fishing co-operative must be established and resident in the United Kingdom, with its primary object being to assist members in carrying on agricultural, horticultural, fishing, or shellfish businesses.
• Whether a body qualifies as a co-operative association is determined by the Secretary of State (or, in Northern Ireland, the Department of Agriculture and Rural Development), who must consider how the body's constitution provides for income to be applied for members' benefit.