Corporation Tax Act 2010 section 1156

Calculation of amounts owned indirectly: main rules

Section 1156 sets out the rules for calculating how much of a company's ordinary share capital is owned indirectly by another company, which is relevant when determining whether a company qualifies as a 51% or 75% subsidiary.

• Where company A owns 100% of company B's ordinary shares, A is treated as indirectly owning all ordinary share capital that B itself owns, whether directly or indirectly
• Where company A owns a fraction of company B's ordinary shares, and B owns shares in company C, A's indirect ownership of C is calculated as: fraction owned in B multiplied by the amount of C's shares owned by B
• The formula is F × M, where F is A's fractional ownership of B and M is the amount of C's ordinary share capital owned by B (directly or indirectly)
• Where B itself owns shares indirectly, the same rules are applied repeatedly down the chain to calculate B's indirect ownership before applying the formula