83 Expenses of management of investment companies

Summary

In computing profits for corporation tax purposes, a deduction is available in respect of management expenses incurred by resident investment companies (including savings banks) in computing profits for corporation tax purposes.

Also, any unabsorbed management expenses and charges on income may be carried forward for set off against income of a subsequent accounting period.

Details

Definition

(1) “investment company” is any company whose business is the making of investments and whose income derives from the making of investments. Savings banks are specifically included as investment companies.

Management expenses deductible in computing profits

(2) Management expenses of a resident investment company (except any expenses deductible in computing income from rents, etc assessable under Case V of Schedule D) are deductible in computing profits for corporation tax purposes. The amount of management expenses available for deduction is restricted by the amount of any income of the accounting period derived from sources not charged to tax, apart from franked investment income (that is, the sum of a dividend or other distribution – see section 156).

Carry forward of excess management expenses and charges

(3) Where in an accounting period the aggregate of the management expenses and any charges on income paid wholly and exclusively for the company’s business exceed the profits from which they are deductible, the excess may be carried forward for set-off against profits of subsequent accounting periods.

Lump sum redundancy payments and employers’ superannuation contributions

(4) Included as management expenses are any lump sums paid under the Redundancy Payments Act, 1967 and any employer’s contributions under an approved superannuation scheme.

Relevant Date: Finance Act 2019