CTM03951 | Small profits rate: financial year 2023 onwards: close investment holding companies

CTA10/S18N

Close investment-holding companies are chargeable at the CT main rate and are not eligible for the standard small profits rate or marginal relief.

CTA10/S18N provides that all close companies are treated as close investment-holding companies unless they exist wholly or mainly for the purpose of trading commercially or investing in land for (unconnected) letting or acting as a holding or service company within a group that exists wholly or mainly to trade or invest in land for (unconnected) letting.

Regardless of whether it is in business and the number of associated companies it has, a close company that simply holds investments such as a bank deposit account will fall within the definition of a close investment-holding company at CTA10/S18N, and will be liable at the full rate of CT (for full details of the rules see CTM60700 onwards).

CTA10/S18N (5) provides that a company in liquidation is not treated as a close investment-holding company for the accounting period that begins by virtue of commencement of the winding up (CTA09/S12 (3)) if it was not a close investment-holding company in the prior accounting period and it may, therefore, be eligible for the standard small profits rate or marginal relief if its profits do not exceed the relevant thresholds. See CTM60780. This does not apply to comapnies in administration whose status as a close investment-holding company or otherwise is determined on the facts.