The regime dealing with the taxation of close investment holding companies will be reintroduced from 1 April 2023 when the standard small profits rate of corporation tax will also be reintroduced (see D1.1201). The commentary below reflects the regime as it will apply from financial year 2023 onwards. HMRC guidance can be found at CTM60700 onwards.
Where a close company falls within the definition of a close investment holding company, there are additional anti-avoidance rules which mean that the small profits rate of corporation tax is not available to such a company1.
As such a close investment holding company is charged to corporation tax on its profits (income and chargeable gains) calculated in the normal way, with no special restrictions on the deduction of interest payments, annual payments or management expenses2.
This means that all the company's profits (not just its investment income) are chargeable at the main rate of corporation tax. Consequently, if the company's profits do not exceed the lower limit (D1.1205) it will suffer a permanent disadvantage
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