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HMRC internal manual

Company Taxation Manual

HM Revenue & Customs
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Corporation Tax: change of ownership: companies with investment business: significant increase in capital

CTA2010/S677 (2) and S688 to 691

For the purposes of Section 677 whether there is a significant increase in the amount of the company’s capital is determined in accordance with Sections 688 to 691.

The test involves a comparison of:

  • Amount A (CTA2010/S689(1)), which is the lower of:


  • the amount of the company’s capital immediately before the change of ownership, and
  • the highest amount over a 60 day minimum period for the year before the change,


  • Amount B (CTA2010/S690), which is the highest amount for a 60 day minimum period in the three years beginning with the change in ownership.

There is a significant increase in the amount of the company’s share capital if:

  • Amount B exceeds Amount A by £1 million or more, or
  • Amount B is at least twice Amount A

For these purposes a company’s capital is the aggregate of:

  • the amount of the paid up share capital including any share premium,
  • the outstanding amount of any debts as defined in CTA2010/S453 including any interest on those debts, and
  • the amount of any redeemable loan capital.

Capital is to be expressed in sterling and rounded up to the nearest pound.

Any conversion into sterling should be at the rate prevailing at the time the capital was introduced or, in the case of debt, when it was incurred. Capital is always to be included at its sterling historic cost. Changes in the value of sterling will not therefore affect the calculation of the increase in capital.