# 🇬🇧 CFC in the United Kingdom: TIOPA 2010 Part 9A, TOAA and the FIG Regime

> British CFC rules: TIOPA 2010 Part 9A, gateway tests, charge calculation and interaction with Transfer of Assets Abroad and the FIG regime.

Author: Мария Плотникова — юрист, Family Office (https://wiki.private.law/authors/plotnikova)
Last modified: 2026-07-17T04:52:00.000Z
Canonical: https://wiki.private.law/en/uk-cfc
Topics: investments, structures
Jurisdictions: uk
Product tags: cfc, pillar-two
Semantic tags: cfc, pillar-two

---

For a high-net-worth UK resident, the question "how does the state reach the profits of my foreign company" breaks down into two independent mechanisms. If the structure includes a UK company, the corporate CFC regime (TIOPA 2010 Part 9A) applies and the company itself bears the tax. If an individual holds the foreign company directly, Transfer of Assets Abroad (ITA 2007 ss.714–751) kicks in at the individual level. The regimes are written in different parts of the legislation, catch different persons and interface in their own way with the [FIG regime](https://wiki.private.law/en/uk-fig-regime) and Pillar Two. Below we examine the structure of each and the boundaries between them.

## Concept

**UK CFC charge** is governed by **TIOPA 2010 Part 9A** — a corporate tax on undistributed chargeable profits of foreign companies controlled by UK residents (>50%). It applies **only to UK resident companies**; for resident individuals a separate regime applies — **Transfer of Assets Abroad** (TOAA, ITA 2007 ss.714–751).

In force since **1 January 2013** (Finance Act 2012 Schedule 20); replaced ICTA 1988 ss.747–756 following the ECJ decision in Cadbury Schweppes C-196/04. Part 9A is built around the **CFC charge gateway**: entity-level exemptions (Chapters 10–14) plus categories of chargeable profits (Chapters 4–9).

> 🍓 UK CFC (Part 9A) targets UK companies that control low-tax foreign subsidiaries; resident individuals are caught by the separate Transfer of Assets Abroad regime. Both rules have passed state aid scrutiny and now coexist with the FIG regime and Pillar Two.

For a UK resident (HNWI) who owns a foreign company directly, Part 9A **does not apply** — there is no UK company in the structure. Instead, TOAA applies. With the arrival of the FIG regime (from 6 April 2025), TOAA-attributed income is exempt for the first 4 years.

## Historical Background

- **1984** — Finance Act 1984 Schedule 18, codified in ICTA 1988 ss.747–756.
- **12 September 2006** — *Cadbury Schweppes v IRC* C-196/04 (ECJ): CFC rules restrict freedom of establishment and are justified only against "wholly artificial arrangements".
- **2012/2013** — Finance Act 2012 s.180 + Schedule 20 introduced TIOPA 2010 Part 9A.
- 21 November 2023 — Fisher v HMRC [2023] UKSC 44: Supreme Court narrowed TOAA — shareholders are not "transferors" when the transfer is made by their own company (later partially reversed by legislation).
- 6 March 2024 — Spring Budget: announced abolition of non-dom remittance basis and replacement with FIG regime from 6 April 2025.
- **19 September 2024** — *UK and Others v Commission* [C-555/22 P](https://curia.europa.eu/juris/liste.jsf?num=C-555%2F22) / C-556/22 P / C-564/22 P (CJEU): **annulled** the European Commission's 2019 decision on state aid against UK CFC Chapter 9 (Group Financing Exemption).
- **6 April 2025** — Finance Act 2025: introduced FIG regime. TOAA and Part 9A continue to apply; FIG modifies TOAA for individuals.
## CFC Charge Scope (TIOPA ss.371AA–371AC)

**A CFC is a non-UK resident company controlled by a UK resident or residents (>50%, s.371RB/RE).**

**Control tests:**

- Standard **>50% control test**
- **40% joint venture test** (two shareholders each ≥40%)
- **Accounting consolidation test** (FRS 2 / IFRS 10)
**Minimum participation threshold:** a UK company falls within the charge if its apportioned interest is at least **25%** of the CFC's chargeable profits (s.371BD).

**CFC charge applies only to UK resident companies.** Resident individuals fall under TOAA.

## CFC Charge Gateway (s.371BA)

A charge arises if:

1. The CFC has chargeable profits for an accounting period
2. No entity-level exemption (Chapters 10–14) applies
**Mechanics:** chargeable profits → apportionment to UK companies with ≥25% interest → charge at main UK CT rate (25% from FY 2023) → deduction of creditable tax (foreign tax paid).

## Entity-Level Exemptions (Chapters 10–14)

- **Chapter 10 — Exempt Period (s.371JA):** 12-month grace period for newly acquired CFCs.
- **Chapter 11 — Excluded Territories (s.371KA):** CFCs in jurisdictions listed in SI 2012/3024 (Controlled Foreign Companies (Excluded Territories) Regulations 2012) subject to qualifying income conditions. HMRC INTM225000.
- **Chapter 12 — Low Profits (s.371LA / s.371LB):**
  - Accounting profits ≤**£50,000** (s.371LB(2)), OR
  - Assumed taxable total profits ≤**£50,000** (s.371LB(3)), OR
  - Accounting profits ≤**£500,000** + non-trading income ≤£50,000 (s.371LB(4)).
- **Chapter 13 — Low Profit Margin (s.371MA–MC):** accounting profits not exceeding **10%** of relevant operating expenditure.
- **Chapter 14 — Tax Exemption (s.371NA–NE):** foreign tax paid is at least **75%** of comparable UK CT. Designer rate provisions are excluded.
## Chargeable Profit Categories (Chapters 4–8)

- **Chapter 4 (s.371CA–DJ) — profits attributable to UK activities:** "significant people functions" in the UK or assets/risks managed from the UK. Safe harbour — Conditions A–D in s.371CA. HMRC INTM200500, INTM197360.
- **Chapter 5 (s.371EA–EE) — Non-Trading Finance Profits (NTFPs):** passive profits from intra-group loans, unless partial/full exemption under Chapter 9 applies.
- **Chapter 6 (s.371FA–FE) — Trading Finance Profits.**
- **Chapter 7 (s.371GA–GC) — Captive Insurance Business.**
- **Chapter 8 (s.371HA–HB) — Solo Consolidation** (regulated subsidiaries).
## Group Financing Exemption (Chapter 9, ss.371IA–IJ)

For NTFPs from "qualifying loan relationships" (QLRs) — intra-group loans where the CFC lends to a non-UK borrower — Chapter 9 provides on claim:

- **75% exemption** (s.371ID) — partial exemption, standard relief
- **100% exemption** — if loans are funded from "qualifying resources" (s.371IB) or "matched interest" applies (s.371IE)
The state aid saga around Chapter 9 Group Financing Exemption:

- October 2017 — European Commission opened investigation SA.44896
- 2 April 2019 — European Commission decision: Chapter 9 is incompatible state aid in respect of NTFPs from QLRs under s.371EB (UK SPF), but NOT under s.371EC (UK capital investments). Published in OJ 20 August 2019.
- UK reformed Chapter 9 from 1 January 2019
- 8 June 2022 — General Court (T-363/19, T-456/19) upheld the European Commission
- **19 September 2024** — CJEU on appeal (C-555/22 P + C-556/22 P + C-564/22 P) **annulled** the decision: the European Commission incorrectly defined the reference framework. The exemption survived.
- 2024–2026 — epilogue: following annulment, the Controlled Foreign Companies (Reversal of State Aid Recovery) Regulations 2024 (SI 2024/1307) returned previously recovered amounts to companies, and Finance Act 2026 s.51 (Royal Assent 18 March 2026) settled interest on repayments.
## Transfer of Assets Abroad (ITA 2007 ss.714–751)

**Scope:** UK resident individuals, not companies. Origins — Finance Act 1936; current version — ITA 2007 Part 13 Chapter 2.

**Three charges:**

- **s.720–721** — Income charge: UK resident has "power to enjoy" in relation to income of a person abroad connected with a relevant transfer
- **s.727–728** — Capital sum charge: UK resident receives a capital sum connected with the transfer
- **s.731–733** — Benefits charge: UK resident receives a benefit
**Motive Defence (ss.737–742):**

- **Condition A:** it is reasonable to conclude that tax avoidance was NOT a purpose; OR
- **Condition B:** transactions were genuinely commercial and not designed for tax avoidance
For transactions after 4 December 2005, the reformulated test in s.737 applies.

**Fisher v HMRC [2023] UKSC 44 (21 November 2023):** The Supreme Court unanimously held that shareholders are NOT "transferors" for TOAA purposes when the transfer is made by a company they own. The Fishers' shareholdings in SJA (which in February 2000 transferred the telebetting business to Gibraltar-based SJG) did not make them transferors. Taxpayers' appeals allowed.

Legislative reversal: Finance (No.2) Act 2024 introduced new ss.720A/727A ITA 2007 — deeming provisions treating participators in a close company as "transferors" for transfers made by the company itself (including foreign companies that would be close if UK resident). Applies to income arising from 6 April 2024; partially reverses Fisher for close company structures.

## Interface with FIG Regime (from 6 April 2025)

**FIG regime** (Finance Act 2025): for qualifying new residents — the first 4 UK tax years after ≥10 years of non-residence.

**Interface with TOAA (HMRC RFIG45400):** income attributed under s.720 (power to enjoy) or s.727 (capital receipt) and treated as foreign under ss.726/730 **qualifies for FIG relief** on claim. The individual elects FIG separately for each year; exempt income is not subject to UK income tax for all 4 years.

**Part 9A for UK Holdco unchanged:** if the structure includes a UK company, Part 9A continues to apply regardless of the ultimate shareholder's FIG status.

## Pillar Two (Finance (No.2) Act 2023 Part 3)

- **MTT (Multinational Top-up Tax)** — UK IIR. For accounting periods beginning on or after 31 December 2023.
- **DTT (Domestic Top-up Tax)** — UK QDMTT. Same start date.
- **UTPR:** Finance Act 2024 / Schedule 4, for accounting periods beginning on or after 31 December 2024.
**Scope:** MNE groups with consolidated revenue ≥**€750 million** in ≥2 of the 4 preceding accounting periods.

**Interface with CFC:** Pillar Two IIR is essentially a "super-CFC" with broader coverage. UK position: CFC charges under Part 9A are counted **first** when calculating the CFC's ETR for GloBE; these taxes are "pushed down" to the CFC level. If the CFC charge brings the CFC's ETR to ≥15%, no additional top-up under Pillar Two arises. Schedule 12 FA 2024 + Schedule 4 FA 2025.

Side-by-Side (from 2026): under the G7 political agreement (June 2025) and OECD Inclusive Framework administrative guidance (5 January 2026), US-parented groups electing the Side-by-Side safe harbour are excluded from IIR and UTPR — their domestic GILTI/NCTI and CFC rules are recognised "side by side" with Pillar Two; QDMTT continues to apply. The UK announced on 7 January 2026 that it will implement the safe harbour in the next Finance Bill retrospectively — for accounting periods beginning on or after 1 January 2026. Part 9A remains: UK CFC charges are still counted first when calculating the structure's ETR for GloBE.

## Practical Conclusions for HNWIs

**UK resident owning a foreign company directly:**

- Part 9A **does not apply** (no UK company in structure)
- **TOAA gateway** applies — most likely s.720 (power to enjoy) will be triggered
- Motive defence can be considered
- Fisher protection after Finance (No.2) Act 2024 for transfers through close companies is severely limited
**UK resident owning through UK Holdco:**

- **Part 9A applies to UK Holdco**
- Holdco bears CFC charge (CT 25%) on apportioned chargeable profits where interest ≥25%
- Individual does not pay tax directly
**Qualifying new resident under FIG:**

- TOAA-attributed income from a foreign personal investment company is potentially exempt on FIG election (RFIG45400) for 4 tax years
- After 4 years TOAA applies in full — motive defence and entity-level exemptions remain
**Pillar Two for HNWI family offices:** typically relevant only if the structure is part of an MNE group with consolidated revenue ≥€750 million. Typical PIC structures fall well short of the threshold.

**Compliance:**

- **CT600 + CT600B** — UK company reporting for CFC charges (CT600B covers CFC, foreign branch exemptions, hybrid mismatches)
- **SA106 (Foreign pages)** — individual reporting for foreign income, including TOAA-attributed
- **FIG election** — in SA return for qualifying new residents; separate FIG pages from 2025/26
> 🍓 In practice, everything hinges on one question: is there a UK entity in the structure? UK Holdco — and Part 9A calculates apportioned chargeable profits, tax at 25% borne by the company. Direct individual ownership — Part 9A is silent and TOAA looks through "power to enjoy"; FIG gives only a four-year reprieve and costs the loss of personal allowance and CGT annual exempt amount. Pillar Two covers groups with turnover ≥€750 million from above, preserving CFC and TOAA beneath it.

## Q/A

### Who does UK CFC charge apply to

UK resident companies with ≥25% interest in a foreign company controlled by UK residents (>50%). Does NOT apply directly to individuals.

### What about UK resident individuals

They are caught by TOAA (ITA 2007 ss.714–751): income of the foreign company is attributed to the UK transferor through power to enjoy / capital receipt / benefits. Motive defence (Conditions A/B) is available. Fisher v HMRC [2023] UKSC 44 narrowed the scope; Finance (No.2) Act 2024 extended TOAA to close companies.

### What entity-level exemptions are there

Exempt Period (12 months), Excluded Territories (SI 2012/3024), Low Profits (£500,000), Low Profit Margin (10%), Tax Exemption (75%).

### What is the CFC charge gateway

Chapters 4–9: profits fall within the charge only if they pass through one of the gateways. Chapter 4 — UK activities; Chapter 5 — non-trading finance profits; Chapter 9 — group financing exemption (75% / 100%).

### What about Cadbury Schweppes after Brexit

Cadbury Schweppes is a 2006 ECJ decision with the "wholly artificial arrangements" test. After the UK left the EU, the principle lives on through UK court interpretation, but as EU law it is no longer binding. The CJEU in the UK CFC state aid case C-555/22 (September 2024) annulled the European Commission's decision.

### What about the FIG regime

FIG (Finance Act 2025) — 4 years of 100% relief on foreign income and gains for qualifying new residents (after ≥10 years of non-residence). TOAA-attributed income is included in FIG (RFIG45400) — exempt for FIG residents. Part 9A for UK Holdco is unchanged.

### How does Pillar Two interface with CFC

MTT (IIR) + DTT (QDMTT) — for financial years from 31 December 2023; UTPR — from 31 December 2024. Scope ≥€750 million. CFC charge is counted first; these taxes are pushed down into the GloBE ETR. If the CFC's ETR is ≥15%, no top-up arises.

### What reporting forms

CT600 + CT600B (companies, CFC); SA106 (individuals, foreign income); FIG pages in SA return from 2025/26.

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## FAQ

### Who does UK CFC charge apply to

UK resident companies with ≥25% interest in a foreign company controlled by UK residents (>50%). Does NOT apply directly to individuals.

### What about UK resident individuals

They are caught by TOAA (ITA 2007 ss.714–751): income of the foreign company is attributed to the UK transferor through power to enjoy / capital receipt / benefits. Motive defence (Conditions A/B) is available. Fisher v HMRC [2023] UKSC 44 narrowed the scope; Finance (No.2) Act 2024 extended TOAA to close companies.

### What entity-level exemptions are there

Exempt Period (12 months), Excluded Territories (SI 2012/3024), Low Profits (£500,000), Low Profit Margin (10%), Tax Exemption (75%).

### What is the CFC charge gateway

Chapters 4–9: profits fall within the charge only if they pass through one of the gateways. Chapter 4 — UK activities; Chapter 5 — non-trading finance profits; Chapter 9 — group financing exemption (75% / 100%).

### What about Cadbury Schweppes after Brexit

Cadbury Schweppes is a 2006 ECJ decision with the "wholly artificial arrangements" test. After the UK left the EU, the principle lives on through UK court interpretation, but as EU law it is no longer binding. The CJEU in the UK CFC state aid case C-555/22 (September 2024) annulled the European Commission's decision.

### What about the FIG regime

FIG (Finance Act 2025) — 4 years of 100% relief on foreign income and gains for qualifying new residents (after ≥10 years of non-residence). TOAA-attributed income is included in FIG (RFIG45400) — exempt for FIG residents. Part 9A for UK Holdco is unchanged.

### How does Pillar Two interface with CFC

MTT (IIR) + DTT (QDMTT) — for financial years from 31 December 2023; UTPR — from 31 December 2024. Scope ≥€750 million. CFC charge is counted first; these taxes are pushed down into the GloBE ETR. If the CFC's ETR is ≥15%, no top-up arises.

### What reporting forms

CT600 + CT600B (companies, CFC); SA106 (individuals, foreign income); FIG pages in SA return from 2025/26.

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## Factual claims

- UK CFC charge is governed by TIOPA 2010 Part 9A — a corporate tax on undistributed chargeable profits of foreign companies controlled by UK residents (>50%).
- In force since 1 January 2013 (Finance Act 2012 Schedule 20); replaced ICTA 1988 ss.747–756 following the ECJ decision in Cadbury Schweppes C-196/04.
- For a UK resident (HNWI) who owns a foreign company directly, Part 9A does not apply — there is no UK company in the structure.
- A CFC is a non-UK resident company controlled by a UK resident or residents (>50%, s.371RB/RE).
- Minimum participation threshold: a UK company falls within the charge if its apportioned interest is at least 25% of the CFC's chargeable profits (s.371BD).
- Mechanics: chargeable profits → apportionment to UK companies with ≥25% interest → charge at main UK CT rate (25% from FY 2023) → deduction of creditable tax (foreign tax paid).
- For NTFPs from "qualifying loan relationships" (QLRs) — intra-group loans where the CFC lends to a non-UK borrower — Chapter 9 provides on claim:
- The state aid saga around Chapter 9 Group Financing Exemption: