Management expenses of an investment company: CT600 boxes 245 and 850

Last updated: 30 September 2026

Short version. A company with investment business can deduct qualifying revenue management expenses from total profits. CT600 box 245 reports the deduction used, while box 850 reports only the current period's unrelieved management expenses. The opening balance and unused qualifying donations are separate parts of the carry-forward computation.

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1. What counts as a management expense for Corporation Tax?

The company's business must consist wholly or partly of making investments. A company can also trade. Credit unions are excluded from this definition. An ordinary property investment company can meet the investment-business definition without being an investment undertaking excluded from the micro-entity accounts regime.

Under CTA 2009 section 1219, the expense must manage the investment business, be referable to the accounting period and relate to making investments not held for an unallowable purpose. Capital expenses do not qualify under the general rule. Expenses already deductible from total profits or a component of those profits cannot be deducted again. Any necessary apportionment must be just and reasonable. Sections 1221 and 1222 contain specific exceptions and adjustments.

Ordinary letting costs belong in the property calculation. Borrowing costs follow the loan-relationship rules. The accounts heading does not decide tax treatment. Classify each prepared expense before filing. Read the complete statutory conditions.

2. Are investment appraisal and abortive property costs allowable?

HMRC CTM08260 says expenditure up to a decision to acquire a particular investment is generally revenue. Expenditure after that decision is generally capital. The purpose and character of the particular expense still matter. General market appraisal is not automatically deductible simply because no property was bought.

Conveyancing for a specific acquisition can remain capital when the purchase fails. A failed transaction does not turn capital expenditure into revenue expenditure, or automatically create an allowable capital loss. See abortive property purchase costs. Do not classify the same cost as both a property add-back and a management expense reversal.

3. What goes in CT600 boxes 245 and 850?

Current qualifying management expenses are deducted before other deductions from total profits. Unrelieved current expenses carry forward. From 1 April 2017, brought-forward expenses require a claim and do not have the current expense priority. A claim can use all or part of the eligible opening balance, subject to the available profits and carried-forward loss restrictions.

Box 245 includes current expenses used plus brought-forward expenses claimed. Box 850 contains only current management expenses left unrelieved. It excludes the opening pool and unused donations. Box 855 concerns group-relief surrender and is outside this single-company filing route.

The investment business must continue in the next period for the carry-forward deduction. Exclude amounts already used or surrendered as group relief. The claim is normally due within two years of the end of the period receiving the deduction, unless HMRC allows longer. Expenses cannot be carried back. A deductions allowance and the carried-forward loss restriction can limit relief. See HMRC's complete carry-forward guidance.

4. Can an investment company carry forward unused charitable donations?

Qualifying charitable donations are deducted after the other reliefs, except group relief, and cannot reduce taxable profits below zero. Under section 1223, unused qualifying donations made for the purposes of the investment business join the management expense pool. They are not included in box 850. For a company outside that treatment, unused donation relief is normally lost.

5. What happens when accounts cover more than 12 months?

There are two Corporation Tax returns. Allocate the management expense deduction between the displayed periods according to your prepared computation. The expense already included in the accounts follows the accounts split, so its reversal can differ from the deduction assigned to a return. The closing pool from return 1 becomes return 2's opening pool. Each return has its own brought-forward claim and box 850 amount. The filing's final carry-forward is the closing balance after return 2.

6. Worked examples with fictional figures

A company has £18,000 rent and £7,000 property costs, including £2,500 qualifying management expenses. There are no other adjustments. Reversing the £2,500 gives £13,500 property profit. The separate management expense deduction reduces total profits to £11,000. Box 245 is £2,500 and box 850 is blank. The accounts still show the full £7,000 expense.

In a loss year, suppose total profits before management expenses are £900, current management expenses are £1,600 and the eligible opening pool is £400. There is no brought-forward claim and no other relief. Box 245 is £900 and box 850 is £700. The closing pool is £1,100. If an additional £200 qualifying donation made for investment-business purposes is wholly unused, the closing pool becomes £1,300 while box 850 remains £700.

SimpleCompanyTax provides Investment management expenses beside a green 245 badge, plus opening pool, claim and two-return allocation controls. The field tooltip explains that the current total is already included in your accounts costs. The splitter divides that same total between the two returns. You choose the expense classification and review the calculation before submitting. Follow how to enter management expenses in the CT600 wizard.

This is general guidance. Use your prepared figures and treatment. Get accounting or tax advice if you need help deciding whether a particular expense qualifies.