Tx notes fa22 Final

4. Group relief
4.1.
 
Definition of a 75% group 
(a)
One company is the 75% subsidiary of another, or
(b)
Both companies are 75% subsidiaries of a third company.
The holding company must :
(c)
own at least 75% of share capital, and
(d)
be entitled to at least 75% of the subsidiary’s assets on winding up, and
(e)
be entitled to at least 75% of the subsidiary’s profits on a distribution.
Introduction
Group relief is also available in respect of:
๏
current year trading loss
๏
excess qualifying charitable donations and
๏
excess property business losses
Such losses are only excess if they exceed the total profits of the company concerned before any 
other losses have been applied.
As stated in Chapter 18 any unused trading losses or property business losses brought forward by a 
company may now also be surrendered as group relief BUT only to the extent that the loss making 
company is unable to set o
ff
the loss against its own total profits.

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4.2. Sub-subsidiaries 
The holding company must have an 
EFFECTIVE interest
in any sub-subsidiary of at least 75% for 
them to be in the same group for group relief purposes.
For example:
๏
If a parent company owns 90% of the shares in a subsidiary which in turn owns 90% of its 
subsidiary then all 3 companies would be able to group relieve with one another as the parent 
company has an e
ff
ective 81% interest (90% x 90%) in the sub-subsidiary.
๏
If the subsidiary owned only 80% of the shares in the sub-subsidiary, then the parent company 
may only group relieve with its direct subsidiary as its e
ff
ective holding in the sub-subsidiary is 
only 72% (90% x 80%).