TSEM5740 - Trusts for particular purposes: flat management companies - registered social landlords & other ‘exempt landlords’

Registered Social Landlords (RSLs) are, in England and Wales, independent, private sector, non-profit making bodies whose main purpose is to provide decent quality, affordable housing for people on low incomes. About three-quarters of them are charities.

Section 42 LTA 1987 does not apply to tenants of ‘exempt landlords’ (Section 42(1) LTA 1987). In accordance with Section 58(1) (g) LTA 1987 a RSL is an exempt landlord. There are other exempt landlords defined in Section 58(1) & (1A) LTA 1987 such as district councils and certain development corporations. See TSEM5745 where Section 58(1) & (1A) LTA 1987 is reproduced.

Whilst Section 42 LTA 1987 does not apply to RSLs and other exempt landlords, the terms under which sinking funds and/or service charge funds are held by exempt landlords may still create a trust. Typically the terms under which such funds are held will be part of the lease agreement. Any dispute over the existence of a trust or the type of trust brought about by the terms of a lease should be dealt with by the nominated deeds offer in the normal way (see TSEM2125)

See TSEM5750 for changes made to the taxation of service charge trusts from 2006-07.

See TSEM5710 for changes to the taxation of service charge trusts for 2007-08 onwards.