Commentary

C3.1302B Business asset disposal relief—meaning of trading company, holding company and trading group

Capital gains tax
Capital gains tax | Commentary

C3.1302B Business asset disposal relief—meaning of trading company, holding company and trading group

Capital gains tax | Commentary

C3.1302B Business asset disposal relief—meaning of trading company, holding company and trading group

To establish whether a company is an individual's personal company for the purposes of qualifying for business asset disposal relief which was previously known as entrepreneurs' relief prior to April 2020, (see C3.1302A) it is necessary to understand the meaning of trading company, holding company and trading group. Company is defined for purposes as including any body corporate or unincorporated association but does not include a partnership1. The terms trading company, holding company, and trading group generally have the same meanings for business asset disposal relief as for the purposes of holdover relief for gifts of business assets2 (see C3.502), although when considering the meanings for the purposes of conditions A–D in C3.1302A (ie for disposals of shares or securities by an individual), or for the purposes of a disposal of trust business assets (see C3.1305A), they are modified for disposals on or after 18 March 2015 with regard to the treatment of activities carried on by a joint venture company in which the company invests or activities carried on by the company as a partner in a trading firm3.

Trading company—trading activities

A trading company is a company carrying on trading activities which does not carry on non-trading activities to a substantial extent4. HMRC interprets substantial to mean more than 20%5. In measuring a company's non-trading activities to assess whether they are substantial, some or all of the following should be taken into account:

  1.  

    •     income from

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