Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Qualifying trade definition

What does Qualifying trade mean? In practice, a qualifying trade is a business activity that counts for particular UK and Irish tax reliefs and investment schemes. In statute (UK: Income Tax Act 2007 for EIS/SEIS/VCT; Ireland: Taxes Consolidation Act 1997 for EII/SURE), a trade is qualifying if it is conducted on a commercial basis with a view to the realisation of profits, and it does not, at any time during the relevant statutory period (called 'period B' in certain UK provisions), consist wholly or to a substantial extent of excluded activities. Excluded activities are listed in the legislation and typically include dealing in land or financial...

UK VCT qualifying trades: HMRC rules on definition, commerciality, R&D, substantial threshold and excluded activities

Published by a LexisNexis Tax expert

Practice notes

Like the enterprise investment scheme (EIS), the venture capital trust (VCT) regime exists to stimulate investment in smaller, higher‑risk trading businesses. A VCT is a company (not a trust), authorised by HMRC, with shares admitted to trading in a manner that satisfies the listing condition outlined in Practice Note: VCTs—VCT conditions for HMRC approval—The listing condition.

Individuals may access a range of tax reliefs, while spreading risk, by subscribing for (or, for certain reliefs, buying) VCT shares. The VCT then invests by subscribing for new shares or debt issued by unquoted companies (for these purposes, companies quoted on AIM are treated as unquoted). For fuller information on the tax reliefs available to individual VCT investors, and on the corporation tax reliefs applicable to VCTs themselves, see Practice Note: VCTs—introduction, tax reliefs and returns.

The VCT regime is prescriptive and imposes various conditions that must be satisfied before such tax reliefs can be claimed, including requirements relating to:

the individual investor and their investment in VCT shares, see Practice Note: VCTs—introduction, tax reliefs and returns
the VCT itself, which must be

...

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Web page updated on 26/05/2026

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