What is a qualifying investment under section 204 of the Corporation Tax Act 2010?

A qualifying investment under section 204 falls into one of five categories: shares or securities listed on a recognised stock exchange or dealt in on an HMRC-designated market, units in authorised unit trusts, shares in open-ended investment companies, interests in offshore funds, or qualifying interests in land. Only these investments attract corporation tax relief under this Chapter.

Does HMRC have the power to designate markets for qualifying investment purposes?

Yes, HMRC can designate markets by order for qualifying investment purposes. HMRC may name a specific market or refer to a class or description of market more generally. HMRC also has power to vary or revoke any previous designation order, allowing the list of designated markets to be updated over time as circumstances change.

Would shares in a private unlisted company qualify as a qualifying investment under section 204?

No. Shares in a private company not listed on a recognised stock exchange and not dealt in on any HMRC-designated market would not meet the definition of a qualifying investment under section 204. Therefore, no corporation tax relief would be available under this Chapter for a donation of such shares to charity.

Where do the terms offshore fund and open-ended investment company take their meaning for section 204?

The term 'offshore fund' takes its meaning from the Taxation (International and Other Provisions) Act 2010. The term 'open-ended investment company' is defined elsewhere within the Corporation Tax Act 2010 itself. These cross-references ensure consistency with the broader United Kingdom statutory framework governing corporation tax.

Corporation Tax Act 2010 section 204

Meaning of qualifying investment

Section 204 defines which types of investment count as a "qualifying investment" for the purposes of the relief available under this Chapter.

Qualifying investments include shares or securities listed on a recognised stock exchange or dealt in on an HMRC-designated market in the UK, units in authorised unit trusts, shares in open-ended investment companies, interests in offshore funds, and qualifying interests in land.
The terms "offshore fund" and "open-ended investment company" take their meanings from other specific statutory provisions.
HMRC has the power to designate markets for these purposes, either by naming a specific market or by describing a class of market.
HMRC can vary or revoke any previous designation order, allowing the list of designated markets to be updated over time.

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