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HMRC internal manual

Company Taxation Manual

Groups & consortia: groups - entitlement to profits or assets available for distribution: equity holders - percentage of profits available to


The percentage of the profits, determined as in CTM81035, to which the parent company is beneficially entitled depends on the rights attaching to:

  • the ordinary shares (CTM81010 ordinary shares) in the subsidiary held by the parent company,
  • the loans made by the parent company to the subsidiary which are not normal commercial loans (CTM81010 normal commercial loans), and
  • the shares and loans within CTM81025 in respect of which the parent company is treated as an equity holder. Note that the parent company may have indirect shareholdings and loans. There is guidance on these at (CTM81010 indirect shareholdings etc).

    Under CTA10/S167 the following are excluded from the calculation of the percentage of the profits to which the parent company is entitled:


  • dividends payable to the parent company on restricted preference shares (CTM81010 restricted preference shares) which are not within CTM81025, and
  • interest payable to the parent company on normal commercial loans (CTM81010 normal commercial loans) which are not within CTM81025.  Any payments the parent company has received by way of repayment of:


  • share capital, or
  • the principal secured by any loan, is also excluded unless the payment is a distribution within CTA10/S1000.

    There is guidance at CTM81060 to CTM81085 on situations where an equity holder holds any shares or securities with:


  • rights wholly or partly limited by reference to a specified amount or amounts, or
  • rights which change for different accounting periods. This only applies to dividends or interest that an equity holder receives as such (CTM81010 ‘equity holder as such’).

    There is guidance at CTM81090 to CTM81105 on the situation where an equity holder’s entitlement to profits could change through the operation of option rights.