Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Substantial shareholdings exemption definition

What does Substantial shareholdings exemption mean? A UK corporation tax relief that exempts a company’s gain when it sells a substantial shareholding in another company. In practice, the gain is treated as not a chargeable gain. The regime is statutory: Taxation of Chargeable Gains Act 1992, Schedule 7AC. A “substantial shareholding” generally means 10% or more of the ordinary share capital, with corresponding entitlement to profits and assets, held for a continuous 12‑month period within the previous six years. The exemption can apply to disposals of shares, an interest in shares, and certain assets related to shares. Broadly, the company being disposed of must be a trading...

UK corporation tax: Substantial Shareholdings Exemption—conditions, trading status, holding periods, groups, joint ventures, qualifying institutional investors, two-year look-back, degrouping, reconstructions and anti-avoidance

Published by a LexisNexis Tax expert

Practice notes

The substantial shareholdings exemption (SSE) removes corporation tax on chargeable gains arising on certain disposals of shares by companies. It does not extend to individuals or other non-corporate bodies. The purpose is to simplify corporate restructuring and strengthen the UK’s competitiveness against the ‘participation exemption’ regimes found in some other European countries.

Under the general rule that an exempt asset’s disposal cannot create an allowable loss, any loss realised on a shareholding that qualifies for SSE is not allowable for capital gains. The exemption applies automatically; there is no requirement to claim it, and no option to disapply it where a loss claim would be beneficial.

This Practice Note sets out the scope of the SSE, the conditions that must be satisfied, and the specific rules for institutional investors, company groups, share exchanges and reconstructions.

Summary of conditions

A company (the investing company) disposing of a holding in another company (the target company) may meet the SSE requirements...

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Web page updated on 21/05/2026

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