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D2.305 Definition of a group for capital gains

A group of companies is defined for the purposes of corporation tax on chargeable gains as:

1. Ìý

   •ÌýÌýÌýÌý a company (the 'principal company of the group'), and

2. Ìý

   •ÌýÌýÌýÌý that company's 75% subsidiaries, as well as the 75% subsidiaries of those subsidiaries (and so on)¹, provided the subsidiaries are also effective 51% subsidiaries of the principal company of the group².

3. Ìý

   The 75% definition is similar to the rules for group relief but, for group gains purposes, companies need only 75% of the ordinary shares (and not 75% of distributable profits nor 75% of assets on a winding-up).

In contrast to the rules for group relief purposes, a company can only be a member of one capital gains group.

Example 1

For group capital gains purposes, we must look at the A group as A Ltd is the ultimate holding company (the principal company). A Ltd owns 75% of B Ltd and 56.25% (75% × 75%)