HMRC internal manual

Company Taxation Manual

Groups: group relief: shareholding rule plus the entitlement to profits/assets tests

You should check the other guidance available on GOV.UK from HMRC as Brexit updates to those pages are being prioritised before manuals.

Chapter 6 of Part 5 of CTA10, CTA10/S151(4)

For its subsidiary to qualify as a 75% subsidiary for group relief purposes the parent company must:

  • conform to the definition in CTA10/Ss1154 to 1157 (Chapter 3 of Part 24) by beneficially owning at least 75% of the subsidiary company’s ordinary share capital as defined in CTA10/S1119, and in addition,
  • have a beneficial entitlement to at least 75% of:
  • any profits available for distribution to equity holders(CTM81010) of the subsidiary company, and
  • any assets of the subsidiary company which would be available for distribution to its equity holders on a winding-up.

The detailed rules on these qualifying tests are in Chapter 6 of Part 5 of CTA10 (S157 onwards).  You should apply these rules in line with CTM81000 onwards.

Where these provisions interrupt a group relationship during an accounting period, the rules in CTA10/S138 (CTM80215) apply.