Taxation in the United Kingdom/Legislation/Section 13A of the Income and Corporation Taxes Act 1988

Section 13A of ICTA defines close investment-holding company for the purposes of Section 13(1) and Section 13AA(8) of ICTA. The effect of those Sections is that a close investment-holding company is always taxed at the full rate of corporation tax (currently 30%).

A close investment-holding company is any close company that does not fall within Subsection (2).

A close company falls within Subsection (2) for an accounting period if throughout that accounting period it exists wholly or mainly for one of these purposes:

  • to carry on a trade or trades on a commercial basis;
  • to make investments in land, except where the land is let or to be let to a person connected with the company or a relative of a person connected to the company;
  • to hold shares and securities, or to make loans to a qualifying company (see below) which is controlled by or controls the company and itself wholly or mainly for the purpose of holding share or securities or making loans to one or more qualifying companies;
  • to co-ordinate the administration of two or more qualifying companies'
  • to help a trade or trades carried on by one or more qualifying companies or by a company which has control of the company;
  • to make investments as described in the second point above by one or more qualifying companies or by a company that controls the company.

A qualifying company is a company controlled by the company being considered, or which controls that company and which exists wholly or mainly for one of the first two purposes listed above.

A company that is being wound up is not treated as a close investment-holding company in its first accounting period of the winding-up if it wasn't a close investment-holding company in the last accounting period before the start of the winding-up.

Control is construed as for Section 416 of ICTA, relative has the meaning given by Section 839(8) of ICTA and Section 839 in full, which describes what is meant by "connected person" applies to this Section.