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HMRC internal manual

Company Taxation Manual

HM Revenue & Customs
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Corporation Tax: management expenses: investment company - with investment business

ICTA88/S130 for periods from 1 April 2004

From 1 April 2004 the term ‘investment company’ is only applicable in limited circumstances (CTM08020). From that date management expenses are available to any ‘company with investment business’.

This is defined in the legislation as:

…any company whose business consists wholly or partly in the making of investments.

This is a relaxation of the previous provisions where a company had to have a business that consisted wholly or mainly in the making of investments. The investment income requirement (i.e. that the principal part of the income had to be from investments) has also been dropped.

More companies should therefore be able to claim relief for the expenses of managing their investments. In particular, companies which previously had an investment business but could not claim relief for managing that investment business because they had a substantial trade which meant that they could not meet the wholly or mainly requirement (for example so-called hybrid companies).

But sums, which are otherwise deductible in computing profits, continue to be excluded from expenses of management.

The ‘making of investments’ is part of the old legislation and the Courts have considered its meaning. It will retain the same meaning under the new legislation (see CTM08050).