What does 'company with investment business' mean under Corporation Tax Act 2010 section 729?

Section 729 defines a 'company with investment business' by cross-referencing section 1218B of the Corporation Tax Act 2009. In broad terms, it is a company whose business consists wholly or partly in making investments and whose principal part of income is derived from those investments, rather than from carrying on a trade.

Why is the definition of company with investment business important when a company changes ownership?

When a company changes ownership, specific restrictions in Chapters 2 to 6 of this Part of the Corporation Tax Act 2010 may apply to companies with investment business. These restrictions can limit the carry-forward or use of management expenses, non-trading loan relationship deficits, and other amounts that would otherwise reduce future taxable profits.

Where is the full definition of company with investment business found?

Section 729 does not itself set out the detailed conditions. Instead, it directs you to section 1218B of the Corporation Tax Act 2009, which contains the full definition. This cross-referencing approach means the substantive criteria for qualifying as a company with investment business are located in the 2009 Act rather than the 2010 Act.

Can you give an example of a company with investment business under section 729?

A company that holds a portfolio of shares, bonds, and rental properties, deriving its income principally from dividends, interest, and rent rather than from carrying on a trade, would be considered a company with investment business. If such a company changes ownership, restrictions on accumulated management expenses and non-trading loan relationship deficits may apply.

Corporation Tax Act 2010 section 729

Meaning of "company with investment business"

Section 729 defines the term "company with investment business" for the purposes of the rules on change of company ownership contained in this Part of the Act.

The term "company with investment business" is used in the provisions dealing with changes in company ownership and their tax consequences.
The definition is not contained in this section itself but is found by cross-reference to section 1218B of the Corporation Tax Act 2009.
A company with investment business is broadly one whose business consists wholly or partly in making investments, and whose principal part of income is derived from those investments.
This definition is relevant because certain restrictions on the use of losses and other amounts following a change of ownership apply specifically to companies with investment business.

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