Substantial shareholding exemption (SSE): company disposals and tax

The substantial shareholding exemption (SSE) can be a powerful relief from chargeable gains for corporate taxpayers but there are circumstances where it has not always been clear whether the qualifying conditions are met, explains Paul Davies, tax specialist writer at CCH

Forthcoming changes will enhance the range of circumstances in which the relief applies and reduce much of that uncertainty. This article looks at the proposed changes which, although not due to be enacted until Royal Assent of Finance (No. 2) Act 2017 later this year, are expected to retrospectively apply to disposals taking place on or after 1 April 2017.

Existing exemption

The main SSE exemption provides that a disposal by an investing company of shares in a target company does not give rise to a chargeable gain if the following requirements are satisfied:

(1) the substantial shareholding requirement;

(2) the investing company trading requirement; and