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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Entrepreneurs’ Relief: trading company and holding company of a trading group


Entrepreneurs’ Relief is available in respect of material disposals of shares in or securities of a company (or interests in shares in or securities) where:

  • the company is the individual’s or, in the case of the disposal of trust business assets, the qualifying beneficiary’s, ‘personal company’ - see CG63985, and
  • the individual or the qualifying beneficiary is an officer or employee of the company, or of a company within the same group - see CG64110, and
  • the company is either a trading company or the holding company of a trading group. TCGA92/S169S(5) provides that these terms are defined in TCGA92/S165A - see CG64060.


‘Company’ is defined for Capital Gains Tax purposes in TCGA92/S288. It includes any ‘body corporate’ or `unincorporated association’ but does not include a partnership.

Groups of Companies

For Entrepreneurs’ Relief purposes TCGA92/S165A (12) defines a group of companies as consisting of a company which has one or more 51 per cent subsidiaries, together with those subsidiaries.

A 51 per cent subsidiary is defined in CTA10/S1154 - S1157 (previously ICTA88/S838). A company is a 51 per cent subsidiary if more than half its ordinary share capital is owned directly or indirectly by another company.

‘Trading company’ or ‘Trading group’

TCGA92/S165A (3) then defines a “trading company” as a company which carries on trading activities and does not carry on other activities to a substantial extent.

TCGA92/S165A (7) similarly defines “trading group” as a group of companies, one or more of which carries on trading activities, and whose activities taken together do not carry on other activities to a substantial extent.