diff --git a/app/models/location.rb b/app/models/location.rb
index 64272d549..af7cb1365 100644
--- a/app/models/location.rb
+++ b/app/models/location.rb
@@ -169,10 +169,6 @@ class Location < ApplicationRecord
       errors.add :postcode, error_message
     else
       self.postcode = PostcodeService.clean(postcode)
-      if postcode_changed?
-        self.location_admin_district = nil
-        self.location_code = nil
-      end
     end
   end
 
@@ -200,9 +196,16 @@ private
 
   def lookup_postcode!
     result = PIO.lookup(postcode)
+    unless location_admin_district_changed?
+      self.location_admin_district = nil
+      self.location_code = nil
+    end
     if result
       self.location_code = result[:location_code]
       self.location_admin_district = result[:location_admin_district]
+      self.is_la_inferred = true
+    else
+      self.is_la_inferred = false
     end
   end
 end
diff --git a/db/migrate/20231218105226_add_la_inferred_to_locations.rb b/db/migrate/20231218105226_add_la_inferred_to_locations.rb
new file mode 100644
index 000000000..781b528d9
--- /dev/null
+++ b/db/migrate/20231218105226_add_la_inferred_to_locations.rb
@@ -0,0 +1,5 @@
+class AddLaInferredToLocations < ActiveRecord::Migration[7.0]
+  def change
+    add_column :locations, :is_la_inferred, :boolean
+  end
+end
diff --git a/db/schema.rb b/db/schema.rb
index 610f2f1a4..22d67bb9f 100644
--- a/db/schema.rb
+++ b/db/schema.rb
@@ -10,7 +10,7 @@
 #
 # It's strongly recommended that you check this file into your version control system.
 
-ActiveRecord::Schema[7.0].define(version: 2023_12_04_101105) do
+ActiveRecord::Schema[7.0].define(version: 2023_12_18_105226) do
   # These are extensions that must be enabled in order to support this database
   enable_extension "plpgsql"
 
@@ -355,6 +355,7 @@ ActiveRecord::Schema[7.0].define(version: 2023_12_04_101105) do
     t.datetime "startdate"
     t.string "location_admin_district"
     t.boolean "confirmed"
+    t.boolean "is_la_inferred"
     t.index ["old_id"], name: "index_locations_on_old_id", unique: true
     t.index ["scheme_id"], name: "index_locations_on_scheme_id"
   end
diff --git a/spec/models/location_spec.rb b/spec/models/location_spec.rb
index 1b9edb9bf..5cfbeddee 100644
--- a/spec/models/location_spec.rb
+++ b/spec/models/location_spec.rb
@@ -24,6 +24,7 @@ RSpec.describe Location, type: :model do
       location.postcode = "M1 1AE"
       location.save!
       expect(location.location_code).to eq("E08000003")
+      expect(location.is_la_inferred).to eq(true)
     end
 
     it "infers and returns the list of local authorities" do
@@ -33,6 +34,20 @@ RSpec.describe Location, type: :model do
       expect(location.linked_local_authorities.active(Time.zone.local(2023, 4, 1)).first.code).to eq("E06000063")
     end
 
+    context "when local authority cannot be inferred" do
+      before do
+        stub_request(:get, /api.postcodes.io\/postcodes\/CA101AA/)
+          .to_return(status: 200, body: '{"status":200}', headers: {})
+      end
+
+      it "does not set the local authority" do
+        location.update!(postcode: "CA10 1AA", location_code: nil, location_admin_district: nil)
+        expect(location.location_code).to eq(nil)
+        expect(location.linked_local_authorities.count).to eq(0)
+        expect(location.is_la_inferred).to eq(false)
+      end
+    end
+
     context "when location_code is no in LocalAuthorities table" do
       before do
         stub_request(:get, /api.postcodes.io\/postcodes\/CA101AA/)