D7.312 Relief for investment companies' losses on unquoted shares in trading companies
An investment company (as defined below) which has subscribed for ordinary shares in a qualifying trading company (see below), and which incurs a loss on the disposal of those shares, may claim to set the loss against its income for corporation tax purposes, instead of against its capital gains, provided the company making the disposal1:
• is an investment company on the date of the disposal of the shares
• has been an investment company for a continuous period of six years ending on the disposal date (or a shorter continuous period ending on the disposal date, provided it has not before the beginning of that period been a trading company or an excluded company), and
• was not associated with, or a member of the same group as, the qualifying trading company at any time during its ownership of the shares
This is also known as share loss relief for companies.
The loss must be an allowable loss for the purposes of corporation tax on chargeable capital gains, see D1.925.
For a similar relief which is available to individuals see Division E3.7.
An 'investment company' is one whose business consists wholly or mainly of making investments and the main part of whose income is derived from those investments, but for the purposes of this relief excludes a holding company of a trading group2.
For the purposes of share loss relief only, a 'trading company' is a company