CG17948 - Taper relief: business asset: qualifying companies: Taper relief does not apply to disposals before 6 April 1998 or after 6 April 2008

TCGA92/SCHA1/PARA6 (2) - (3)

TCGA92/Sch A1/Para 6 explains when a company is a qualifying company in relation to individuals, the trustees of a settlement and personal representatives. The rules depend also on whether you are looking at periods before or from 6 April 2000.

For periods before 6 April 2000

A company shall be taken as an individual's qualifying company if it is:

• a trading company or the holding company of a trading group, see CG17953; and
• the individual could exercise at least 25 per cent of the voting rights, see CG17951, in that company.

Alternatively, a company will also be a qualifying company if all of the following three conditions are satisfied:

• the company is a trading company or the holding company of a trading group, see CG17953; and
• the individual could exercise at least 5 per cent of the voting rights, see CG17951, in that company; and
• the individual is a full-time working officer or employee of the company or of a company that had a relevant connection with it, see CG17953.

From 6 April 2000

There are different rules to apply in deciding if a company is an individual's qualifying company depending on whether or not it is a trading company.

Trading companies

• A company will be taken as an individual's qualifying company if the company is a trading company or the holding company of a trading group, see CG17953, and;
• one or more of the following conditions was met-

• the company was unlisted, see CG 17953;
• the individual was an officer or employee of the company, or of a company having a relevant connection with it, see CG17953;
• the individual could exercise at least 5% of the voting rights in the company.

Non-trading companies

A company shall also be taken to be an individual's qualifying company at any time from 6 April 2000 when the company was a non-trading company or the holding company of a non-trading group, see CG17953, and

• the individual was an officer or employee of the company, or of a company having a relevant connection with it, and
• the individual did not have a material interest in the company or in any company which at that time had control of the company, see CG17953.

- EXAMPLE

On 6 February 1999 an individual acquires a holding of shares in a listed trading company which carry 3% of the voting rights of the company and on 6 June 1999 becomes a part-time employee of that company. On 6 October 2001 the part-time employment with the company ends. On 6 December 2001 the individual sells the entire holding of shares at a gain of £60,000.

Between 6 February 1999 and 5 April 2000 the holding of shares is not a business asset. On 6 April the holding of shares becomes a business asset. On 6 October 2001 the holding ceases to be a business asset as the individual ceased to be an employee of the listed company on that date.