Corporation Tax

Cases in which SSE applies

Produced by Tolley
  • 16 May 2022 13:22

The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Cases in which SSE applies
  • SSE ― the main exemption
  • SSE ― the investee company
  • SSE ― meaning of trading company
  • SSE ― meaning of trading group
  • SSE ― meaning of trading sub-group
  • Aggregation of share ownership to meet the SSE conditions
  • The first subsidiary exemption ― assets related to shares
  • The second subsidiary exemption ― conditions for the main exemption have previously been met
  • The third subsidiary exemption ― institutional investors
  • More...

Cases in which SSE applies

SSE ― the main exemption

The substantial shareholdings exemption (SSE) applies to disposals of shares and interests in shares by qualifying companies on or after 1 April 2002 and exempts gains from corporation tax in certain circumstances. Conversely if losses are generated by the disposal and the SSE conditions are met, they are not allowable.

The commentary set out in this guidance note is based on the legislation for disposals on or after 1 April 2017. For details of the regime as it applied before this date, see Simon’s Taxes D1.1071.

The investee company and the shareholding itself must satisfy certain requirements in order for the investing company to benefit from the exemption. The key conditions are as follows:

  1. at the time of the disposal, the investing company has owned at least 10% of the ordinary shares of the investee company (alternatively, qualifying institutional investors have owned at least 25% of the ordinary share capital of the investee company with an acquisition cost of at least £20m (see below)) for a continuous period of 12 months during the previous six years

  2. from the beginning of the latest period of 12 months for which the substantial shareholding condition is met until the time of the disposal, the investee company must have been a trading company or the holding company of a trading group or sub-group

The investing company must also be entitled to:

  1. at least 10% (or a proportionate percentage) of the profits and assets available for distribution to

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

There's no margin for error. Think Tax.
Think Tolley.

TolleyGuidance gives you direct access to critical, comprehensive and up-to-date tax information and expertise you can rely on.

TAKE A FREE TRIAL

Popular Articles

‘Bed and breakfasting’ with shares

‘Bed and breakfasting’ was the pre-1998 practice of selling shares and repurchasing them the following day. This technique can still be used in a modified form to achieve capital gains tax (CGT) savings for current or future tax years using:•a spouse / civil partner•a self-invested pension plan

22 Mar 2022 09:43 | Produced by Tolley Read more Read more

Taxable state benefits

The majority of state benefits (also called social security benefits) are managed by the Department of Work and Pensions (DWP) via the Jobcentre Plus.Some benefits are dependent on a national insurance contribution record (and different classes of national insurance provide different benefit

25 Feb 2022 15:23 | Produced by Tolley Read more Read more

Employer Financed Retirement Benefit Schemes (EFRBS)

IntroductionA pension scheme that is not a registered scheme is known as an EFRBS. Since April 6 2006, the distinction between what were approved and unapproved pension schemes has been replaced with a distinction between registered and unregistered schemes.The position as it applies with effect

16 May 2022 13:25 | Produced by Tolley in association with John Hayward Read more Read more