Corporation Tax payment on bank interest for Residents Association (Unincorporated Association)

Hello, I'm looking for an answer on whether a Residents Association that is set up as an Unincorporated Association needs to pay Corporation Tax on interest received from money in a bank account. The Residents Association exists to gather money for street repairs, and in some years there is a surplus of income over expenditure. This money is retained within the association or future expenditure (and isn't a "profit" as such). The Residents Association does not trade, and only deals with street issues. The guidance for Unincorporated Associations on https://www.gov.uk/unincorporated-associations states: "The association may make a profit if it starts trading or receives other income, for example from investments. If this happens, you’ll need to pay Corporation Tax". Can you confirm if the interest from the bank account counts as income from investments? And if so, does the Residents Association need to register with HMRC to pay tax? The amount of interest received is approximately £800. Thanks

Hi ,
 

With regards to property management, flat management and other such resident associations funds received in the form of interest is subject to corporation tax. Whilst normally such entities would be entitled to what's known as concessional exemption whereby despite being active HMRC will record them as dormant one of the rules to this is that their tax burden does not exceed £100. If you believe this would be the case for yourselves I recommend writing to HMRC detailing your circumstances so the situation can be reviewed. Regarding the type of income when reporting such information this is covered by our online manual BIM40805 - Specific receipts: interest and dividends: whether trade receipt  . Thank you .