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Which companies may deduct management expenses?

A deduction for management expenses is available for ‘companies with investment business’. This is defined as a ‘company whose business consists wholly or partly of making investments’. It therefore includes trading companies which also have an investment business. For further details on the definition, see the Investment companies and companies with investment business guidance note.

Expenses of management of the company’s investment business which are referable to an accounting period are allowed as a deduction from the company’s total taxable profits. The expenses are ‘referable’ to that accounting period when they are debited to a company’s accounts in the profit and loss account or income statement, the statement of recognised gains or losses, or statement of changes in equity in accordance with GAAP. See ‘Accounting period to which management expenses relate’ below for more information on this.

What general categories of expenditure will be treated as management expenses?

As a general rule, expenses will be allowable as management expenses only if they:

1. •

   relate to managing the company’s investment