Direct tax services for the social housing sector

There is a popular myth that charitable RSLs do not pay tax, indeed the head of HMRC (Charities) has said that charities should pay no direct tax (corporation tax and income tax).

What he should have said, of course, is that charities, including charitable RSLs, should not pay any direct tax provided they work within a complex web of very specific exemptions. In addition while HMRC will not automatically request a tax return from you every year, there is a legal requirement to submit a tax return and self assess your tax liability if you have income that is outside of the available exemptions. Failure to do this will result in you being liable to penalties.

Non charitable RSLs face a different set of tax challenges. The objective here is to minimise tax liabilities or to put off the time when the early year losses have been utilised and tax starts to be payable.

We have a dedicated Charity and Social Housing tax team who understand the sector and the issues you face. Typically as organisations grow, they expand activities, and move into new areas. This gives added opportunities, but also tax exposure, new development activity, mixed tenure schemes, shared ownership and enlarging community activities are areas where coordinated corporate tax and VAT planning is crucial.

Two top tax tips

Tax help for affordable home ownership
On 14 May HMRC, the Charity Commission and the Homes and Communities Agency published revised guidance on the tax treatment of low cost home ownership. This offers a significant relaxation of the previous rules but also sets a trap for the unwary.

Recent VAT changes affecting the social housing sector
Read about partial exemption standard method and the withdrawal of concession for supply of agency staff.