MTT41520 - Particular entities and adjustments: Standard and non-standard members: Minority owned members
Source: gov.uk (2025-08-05)


Where a group contains a minority owned member, a separate subgroup will exist for the purpose of calculating the effective tax rate and top-up amounts of those members. The effective tax rate and top-up amounts of the minority owned members will be calculated separately from the standard members of the group in the same territory.

Minority owned members are grouped together depending on the ownership interests held. This means that a group may have more than one minority owned subgroup in a territory, depending on the ownership structure.

The treatment of minority owned members is set out in section 228 of Finance (No.2) Act 2023.

Minority owned member

A member of a group is a ‘minority owned member’ if:
- the ultimate parent holds no more than 30% of the ownership interests in that member, and
- the member is not an investment entity.
See MTT17050 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt17050) for guidance on calculating an ownership interest held by a specific entity.

Minority subgroup

A minority subgroup exists where:
- a minority owned member (“M”) holds (directly or indirectly) ownership interests in another minority owned member of the same group, and
- no other minority owned member of the group holds (directly or indirectly) ownership interests in M.
The minority owned subgroup will consist of:
- M, and
- the minority owned members in which M has ownership interests and which are members of M’s group.
Note that multiple minority subgroups may exist within the same group.

Minority owned member that is not part of a minority subgroup

If a minority owned member does not hold ownership interests in another minority owned member, and no other minority owned member holds an ownership interest in it, it will not be part of a minority subgroup.

Calculating the effective tax rate and top-up tax must be done separately for:
- each separate minority subgroup in a territory, and
- each separate minority owned member that is not part of a minority subgroup.
Safe harbours

The qualifying domestic minimum top-up tax safe harbour election is made separately for minority owned subgroups, which are subject to adjusted disqualifying conditions (see MTT15130 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt15130)).

In the transitional safe harbour, a minority owned member is not treated as being in a separate subgroup and is included with the standard members of the group in the territory (see MTT15970 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt15970)).

Example

A Ltd is the ultimate parent of ABC Group. In Territory A, ABC group has the following members, none of which are an investment entity: A Ltd, B Ltd, C Ltd, D Ltd and E Ltd.

A Ltd directly holds 100% of the ownership interests in B Ltd and 30% of the ownership interests in C Ltd. It has no indirect interests in C Ltd.

B Ltd holds 30% of the ownership interests in D Ltd, including direct and indirect interests.

D Ltd also holds 100% of the ownership interests in E Ltd.

C Ltd, D Ltd, E Ltd are minority owned members for ABC Group because:
- the ultimate parent of ABC Group holds no more than 30% of the interests in each entity, and
- none of them is an investment entity.
D Ltd and E Ltd form a minority subgroup, because:
- D Ltd and E Ltd are minority owned members,
- no minority owned member holds an interest in D Ltd, and
- E Ltd is owned by D Ltd.
C Ltd does not form a minority subgroup because it does not hold ownership interest in any other minority owned member.

ABC Group has three subgroups in Territory A:
- a subgroup consisting of the standard members (A Ltd and B Ltd),
- a minority subgroup consisting of D Ltd and E Ltd, and
- a subgroup consisting of C Ltd, which is a minority owned member that is not part of a minority subgroup.
The effective tax rate and top-up tax amounts are calculated separately for each subgroup.