Is my company a close investment-holding company? (CT600 box 4)

In short: A close investment-holding company (CIHC) is a close company, broadly one controlled by five or fewer people or by its directors, that doesn't exist wholly or mainly to trade, let property commercially or run a trading or letting group. It pays the 25% main rate on all profits, with no small profits rate or marginal relief (CTM03951).

Take the 30-second check to see whether Taxley fits your company.

Key facts (checked on 31 October 2026)

What is a close investment-holding company?

A close investment-holding company is a close company that fails the purpose test in section 18N of the Corporation Tax Act 2010. The law starts from Yes: a close company is a CIHC unless, throughout the accounting period, it exists wholly or mainly for one or more permitted purposes. A company that isn't close can never be one.

The six permitted purposes are set out in CTA 2010 s.18N(2):

1. carrying on a trade on a commercial basis;
2. investing in land that is, or is intended to be, let commercially;
3. holding shares in, or lending to, qualifying companies in its group;
4. co-ordinating the administration of two or more qualifying companies;
5. serving the property investment of qualifying companies, or of a company that controls it;
6. serving the commercial trade of qualifying companies, or of a company that controls it.

A qualifying company is one the company (or a company controlling it) controls, and that exists wholly or mainly to trade or to let land commercially (s.18N(6)). HMRC sums it up in CTM60710: a close company is a CIHC if it doesn't exist mainly to trade commercially, to invest in land for letting to unconnected tenants, or to act as a holding or service company in such a group.

"Wholly or mainly" has no percentage in the law. HMRC's manual asks for a "common sense approach", looking at the levels and sources of income, what the company has done, its minutes and other documents, and its assets and how they are used (CTM60730).

How much more Corporation Tax does a close investment-holding company pay?

A CIHC pays the 25% main rate on every pound of profit. A company that isn't one pays 19% on profits up to £50,000 and gets marginal relief between £50,000 and £250,000. So a company with £30,000 of profit pays £5,700, or £7,500 as a CIHC; at £100,000 it pays £22,750, or £25,000.

The small profits rate and marginal relief both require the company not to be a CIHC (CTA 2010 s.18A(1)(b) and s.18B(1)(b)). GOV.UK lists being a close investment-holding company under "Who cannot claim Marginal Relief" (GOV.UK: Marginal Relief). The arithmetic:

The marginal relief at £100,000 is 3/200 × (£250,000 − £100,000) × £100,000 / £100,000 = £2,250, using the formula in s.18B(2). Both rows assume a UK-resident company with a 12-month period inside financial years 2023 to 2026, no associated companies, no ring fence profits and no exempt dividends, so augmented profits equal taxable profits. Associated companies divide the £50,000 and £250,000 limits (s.18D(3)); our associated companies guide explains that, and the rates and marginal relief guide covers the rates in full.

Is your company a "close" company?

A close company is, broadly, one controlled by five or fewer participators, or by any number of participators who are directors. It is also close if five or fewer participators, or director participators, would get more than half its assets on a winding up. A company owned by one to five people is controlled by five or fewer participators, so it is close unless an exception applies. If yours isn't, it can't be a CIHC, so the answer is No.

The definition is in CTA 2010 s.439, and HMRC's plain-English version is in CTM60060. The control tests count some people's rights together, which this guide doesn't cover, so "five or fewer shareholders" is only a rough guide.

Some companies are never close, even with few owners (s.442 to s.446):

• a non-UK resident company, a registered society or a building society;
• a company controlled by one or more companies that are not close, where it could only be close by counting a non-close company among the five;
• certain quoted companies that meet the conditions in ss.446–447, such as one where the public holds shares carrying at least 35% of the votes and the shares are dealt in on a recognised stock exchange, unless the principal members hold more than 85% of the votes.

Which of Taxley's six answers fits your company?

Taxley's CIHC section opens with one question: "What did the company mainly exist to do, for the whole of this period?" It offers six answers. A company that trades usually answers No, and one that only holds investments usually answers Yes if it is close. Property, group, start-up, wind-down and mixed companies depend on the facts, so Taxley doesn't suggest an answer for them.

For investments, Taxley asks "Is the company controlled by five or fewer people, or by its directors?". Yes leads to "Suggested answer: Yes", No to "Suggested answer: No", and "Not sure" to no suggestion. The sections below explain the rows that depend on the facts.

Does letting property to a director or their family make a company a CIHC?

It can. A letting counts as commercial unless the tenant is connected with the company or is a connected person's family member. An individual is connected with the company if they control it, alone or with connected people (s.1122(3)). Trustees of a family trust can also be connected (s.1122(6)). So letting to the controlling director's daughter isn't commercial; letting to a minority director with no control can be.

The letting rule is CTA 2010 s.18N(3), and the meaning of "connected" comes from s.1122(3). In plain words, the family covered is the connected person's spouse or civil partner, brothers and sisters, parents and grandparents, children and grandchildren, the spouses or civil partners of those relatives, and the in-laws listed in s.18N(3)(b) and (7). HMRC's example in CTM60740 is a letting to the father-in-law of someone connected with the company: that letting is not commercial. A tenant company can be connected too, for example when the same person controls the landlord company and the tenant company (s.1122(2)).

A buy-to-let company whose tenants have no connection with it exists for a permitted purpose, so it usually answers No. One connected letting inside a portfolio let mainly to unconnected tenants doesn't settle the answer on its own: the question is what the company exists wholly or mainly to do, and there is no statutory percentage test or HMRC example for a mixed portfolio. Taxley can't know who your tenants are, so it doesn't suggest an answer for "Let out property it owns". Our property company Corporation Tax guide covers the rest of a letting company's return.

Is a company that only holds investments or cash a CIHC?

Usually yes, if it is close. Holding shares, funds, bonds or bank deposits outside its own group is not a permitted purpose. HMRC says a close company that simply holds investments, such as a bank deposit account, is a CIHC regardless of whether it is in business or how many associated companies it has, and pays the full rate.

That statement is in CTM03951. A company that isn't close is never a CIHC, which is why Taxley asks the control question before it suggests Yes. The profits are still worked out in the normal way: HMRC says there are no special restrictions for a CIHC on deducting interest, annual payments or management expenses (CTM60705). Our investment company CT600 guide explains where the interest, dividends, gains and expenses go.

A trading company that also builds up cash or investments is a different case. If the company still exists wholly or mainly to trade, it isn't a CIHC. Where a lot of its income comes from investments, HMRC weighs the income, activities, minutes and assets together (CTM60730).

Is a holding company of a trading or letting group a CIHC?

Usually not. Holding shares in, or lending to, companies it controls that exist mainly to trade or let commercially is a permitted purpose. HMRC says this keeps the holding company of a trading or property investment group out of CIHC status even when the group is just the holding company and one subsidiary.

That is HMRC's reading of s.18N(2)(c) in CTM60760. The same page covers intermediate holding companies (s.18N(4)) and a company that isn't a holding company but exists to lend to fellow subsidiaries that trade or invest in property. A company that co-ordinates the administration of two or more such companies, or exists to serve their trades or lettings, is also outside CIHC status (s.18N(2)(d) to (f); CTM60770).

The protection depends on the subsidiaries. A qualifying company must exist wholly or mainly to trade or to let land commercially (s.18N(6)), so a holding company whose subsidiaries mainly hold investments doesn't get it. Taxley can't see what each group company does, so it doesn't suggest an answer for the group option. The holding company guide explains how a group shares the rate limits.

What if the company is starting up or winding down?

There is no special rule for a company that hasn't started trading: you look at what it exists to do. HMRC accepts a company can exist to trade in a period with no trading income, but calls that exceptional. Winding up does have a rule: the first period after winding up starts is protected if the company wasn't a CIHC in the period just before.

For start-ups, HMRC says the company's purpose "is not necessarily the same as its current activities", though what it actually does is a significant indicator, and it must have that purpose throughout the period (CTM60720).

For winding up, s.18N(5) protects only the accounting period that begins when the winding up starts. An accounting period ends immediately before the winding up starts. A voluntary winding up starts when the members pass the resolution; a court winding up starts when the petition is presented (CTA 2009 s.12(7)). In later periods a company in liquidation escapes CIHC status only if it meets the usual tests, and a company in administration gets no protection from s.18N(5) (CTM60780).

HMRC's Company Tax Return guide also has a box 4 code 3, for a company in its second or later year of liquidation "chargeable at the main rate". The law still judges those later periods on the usual tests, so read both before choosing a code. Taxley doesn't file returns for companies in liquidation or administration. A company that sold its trade and now just holds the cash is in the position HMRC describes in CTM03951, but whether one about to start a new trade is a CIHC is a question of fact.

What if the company changed during the year?

The test applies to the whole accounting period. A close company is a CIHC unless, throughout the period, it exists wholly or mainly for permitted purposes. So a property company that lets to unrelated tenants for part of the period, then switches to letting mainly to the owner's daughter, can be a CIHC for that whole period.

The word "throughout" is in s.18N(1), and HMRC repeats that the company "must exist for that purpose throughout the relevant accounting period" (CTM60720). A company that sells or stops its trade is different: stopping trading normally ends a Corporation Tax accounting period (CTA 2009 s.10(1)(d)), so the trading period and the cash-holding period after it are judged separately. A company that just holds the cash will usually be a close investment-holding company for that later period.

In Taxley, choose "A mix of these, it changed during the period, or I’m not sure". Taxley says "Taxley can’t suggest an answer from this. Read the full question below and choose the answer that fits best." and opens the full question and its rule. If the facts are finely balanced, a tax adviser can help you weigh them.

How does Taxley ask the close investment-holding company question?

Taxley asks property, mixed and investment companies, and trading companies with no sales but some interest or dividends. Its questions only suggest an answer, with nothing pre-selected; you choose Yes or No yourself. Choosing Yes sets CT600 box 4 to 2. For profits from 1 April 2023, Taxley then charges the 25% main rate with no small profits rate or marginal relief; earlier years used a single 19% rate.

Under the question, Taxley says: "These questions suggest an answer. You still choose Yes or No yourself, below." A suggestion has a button, "Choose Yes" or "Choose No", that ticks the answer for you. What else happens:

• Trading companies: a company that only trades confirms in its declaration that, throughout the period, it existed wholly or mainly to trade on a commercial basis. It can still answer the question itself.
• After Yes: the tax computation shows "Close investment-holding company (box 4 = 2)", and the return moves to the Advanced editor.
• Before you pay: an unanswered question stays on the list of things to finish, and you can change your answer before you pay.

Taxley is software, not a tax adviser, and the answer is yours. Check whether Taxley fits your company, or see the fees for each type of return.

Which sources does this guide rely on?

Every legal point here comes from the Corporation Tax Act 2010 on legislation.gov.uk and from HMRC's Company Taxation Manual and guidance on GOV.UK. All were read on 31 October 2026. The rates and limits are those for financial years 2023 to 2026, which GOV.UK lists as the same for each of those years.

• CTA 2010 s.18N: close investment-holding companies
• CTA 2010 s.18A, s.18B and s.18D: small profits rate, marginal relief and limits
• CTA 2010 s.439: close company and s.1122: connected persons
• HMRC manual CTM60700: close investment-holding companies
• HMRC manual CTM03951: rates for close investment-holding companies
• GOV.UK: Corporation Tax rates and allowances
• GOV.UK: Company Tax Return guide, box 4

Law checked on 31 October 2026 against legislation.gov.uk and GOV.UK; Taxley's questions checked against the product the same day. This is general information, not advice on your company's tax position.

Frequently asked questions

Is a buy-to-let limited company a close investment-holding company?

Usually not. Investing in land let commercially is a permitted purpose, and a letting is commercial unless the tenant is connected with the company or is a connected person's family member. A company letting mainly to unconnected tenants usually answers No (CTA 2010 s.18N).

Does being a CIHC matter if profits are over £250,000?

Not for the rate. Profits above the £250,000 upper limit get no small profits rate or marginal relief anyway, so the 25% main rate applies whether or not the company is a CIHC. The status costs extra only when profits are at or below the upper limit (GOV.UK rates).

Can a company that isn't close be a close investment-holding company?

No. Only a close company can be a CIHC under CTA 2010 s.18N(1). A non-UK resident company, a company controlled by non-close companies, or a listed company with at least 35% of its votes held by the public can fall outside the close-company rules (s.439).

Where does a CIHC go on the CT600?

Box 4, "Type of company". HMRC's return guide says to enter 2 for a close investment-holding company, or 0 if none of the company types apply (GOV.UK: Company Tax Return guide). In Taxley, answering Yes to the question fills in box 4 for you.

What if I'm not sure which answer to choose?

Choose the answer that fits best. Taxley lets you change it before you pay. Think about what the company existed to do for the whole period, not only where its income came from: HMRC weighs income, activities, minutes and assets together (CTM60730).