D7.301 Definition

Corporate tax
Corporate tax | Commentary

D7.301 Definition

Corporate tax | Commentary

Division D7.3     Companies with investment business, investment companies and investment trusts

For updates affecting this Division please see Part D0 Updates

Investment companies

D7.301 Definition

There are two distinct types of company which are commonly described as investment companies.

One is a company whose activities consist mainly in the holding of investments and the receipt of income from them. These are often called investment trusts (although that description has a special meaning for tax purposes, see D7.332) or holding companies.

The other is a company which carries on the business of buying and selling investments with a view to making a profit from such dealing and whose receipt of income from the investments is incidental to the main business. Such companies are often called investment dealing companies (see D7.330–D7.331).

For tax purposes an 'investment company' is defined as any company whose business consists wholly or mainly in the making of investments and the principal part of whose income is derived therefrom1. It includes a savings bank or other bank for savings, other than a successor to a trustee savings bank2. It does not include an investment dealing company.

Special provisions apply to:


    (a)     a unit trust, an open-ended investment company and a venture capital trust (see Division D8.2)


    (b)     an investment trust, as defined for tax purposes (see D7.332–D7.339)


    (c)     a court common investment fund (see D8.110)


    (d)     a property-owning company which is treated as carrying on a UK property business (see Part B9)

A company carrying on a trade or other activity may hold some

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