How does SSE interact with other legislation?

Assets on which capital gains arise are transferred between group companies on a no gain / no loss basis. However, if a company leaves the group within six years ofan intra-group transfer, whilst still owning the transferred asset, a ‘degrouping’ or ‘exit’ charge will arise (see the Degrouping charges guidance note). Similar degrouping rules apply for assets within the intangible regime which are transferred intra-group on a tax neutral basis (see the Degrouping charges and elections ― IFAs guidance note.

For assets on which capital gains arise, a de-grouping charge does not arise in the hands ofthe company leaving the group. Instead, the gain is added to the sales proceeds received by the company selling the shares. For the purposes ofSSE, the deemed transaction is treated as taking place immediately before the company leaves the group (rather than at the time ofthe intra-group transfer as is usually the case). Consequently, the de-grouping charge may be exempt provided that the relevant SSE conditions are satisfied. For full commentary on the key conditions, see the Overview ofthe substantial shareholding exemption guidance note. If a loss is generated on the disposal, it will be deducted from the consideration received by the investing company on disposal ofthe shares in the company leaving the group. The SSE rules effectively override the de-grouping charge provisions. Furthermore, the base cost in the shares that are subject to the degrouping charge is uplifted (or reduced) to the market value ofthe shares at the time ofthe degrouping event. In effect, the company leaving the