Commentary

D1.1061 Substantial shareholding exemption—Interaction with other reliefs

Corporate tax
Corporate tax | Commentary

D1.1061 Substantial shareholding exemption—Interaction with other reliefs

Corporate tax | Commentary

Substantial shareholding exemption—Interaction with other reliefs

D1.1061 Substantial shareholding exemption—Interaction with other reliefs

There are a number of other reliefs from and deferrals of tax arising on chargeable gains. Details of how these interact with the substantial shareholding exemption (SSE) are set out below.

Degrouping provisions

Degrouping charge and share disposal

Where a company leaves a group as a result of a disposal of its shares, any degrouping gain or loss will not arise in the company leaving the group1. Instead, the disposal consideration received by the company making the disposal is increased/decreased by any degrouping gain/loss2. Therefore the amount of any gain/loss, calculated by reference to the deemed disposal, accrues to the group company making the disposal of shares. The computational consequences of this is that any chargeable gain is added to the disposal consideration, and any allowable loss is added to allowable expenditure. If the vendor's gain on the share disposal qualifies for SSE, so does the de-grouping charge added to it.

Where a company leaves a group as a result of a reconstruction falling within the statutory definition of a reorganisation (ie falling within the provisions of TCGA 1992, s 127, see D6.102) it is treated as a leaving a group on a disposal of shares3. In that case, the amount of any gain (or loss) is deducted from/added to the allowable cost of the new holding of shares or securities that the group company receives in exchange for shares4. Note that the provisions altering the date of disposal

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