Ken Moody explores the current ‘state of play’ with the substantial shareholdings exemption for practitioners who may come across it only infrequently, and discusses some practicalities.
The substantial shareholdings exemption (SSE) is now probably about as flexible as it could be without compromising its main purpose, being, broadly to encourage corporate investment in trading companies and to ensure that tax does not drive irrational decision making in corporate structuring (references are to TCGA 1992, Sch 7AC, unless otherwise stated).
The SSE requires that the investing company holds a substantial shareholding in the company invested in (the substantial shareholding requirement (SSR)) throughout a 12-month period beginning not more than six years before the date of the disposal (para 7). I give an example of how this may work shortly.
Any gain on disposal is then exempt from corporation tax
