Corporation Tax Act 2010 section 151

Meaning of "75% subsidiary" and "90% subsidiary"

Section 151 defines what "75% subsidiary" and "90% subsidiary" mean for group relief purposes, including additional conditions beyond simple share ownership that must be satisfied.

• The definitions of 75% and 90% subsidiary follow the general rules in Part 24, Chapter 3 of the Act, but with important modifications for group relief purposes.
• Share capital of a registered society (such as a co-operative or community benefit society) is treated as ordinary share capital when applying the 75% subsidiary test.
• Where a company holds shares in another company as trading stock (so that any profit on sale would be a trading receipt), those shares are ignored when determining whether a 75% subsidiary relationship exists.
• A company only qualifies as a 75% or 90% subsidiary if the parent is beneficially entitled to at least 75% or 90% respectively of both the distributable profits and the assets available on a winding up to equity holders of the subsidiary.