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HMRC internal manual

Capital Gains Manual

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 or securities) where:

  • the company is the “personal company” of the individual or, in the case of the disposal of trust business assets, of the qualifying beneficiary - 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.  These terms have the same meaning as in TCGA92/S165A but you should note that from 18 March 2015 TCGA92/SCH7ZA modifies the meanings given in section 165A (TCGA92/S169SA) - see CG64060.


“Company” is defined for CGT purposes in TCGA92/S288.  It includes any “body corporate” or “unincorporated association” but does not include a partnership or a limited liability partnership (LLP) which is carrying on a trade, profession or business with a view to profit, which is treated as a partnership for TCGA purposes.

Groups of Companies

For Entrepreneurs’ Relief purposes TCGA92/S165A(14) 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. 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) 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(8) similarly defines “trading group” as a group of companies, one or more of which carries on trading activities, and whose members’ activities taken together do not include activities other than trading activities to a substantial extent.

FA2015 amended the definitions of trading company and trading group with effect from 18 March 2015, but the amendments were repealed by FA2016 and treated as never having had effect. FA2016 also introduced Schedule 7ZA (see TCGA92/S169SA) which applies from 18 March 2015, effectively replacing the FA2015 changes. TCGA92/S169S(4A) – introduced by FA2015 - will therefore only be relevant to claims made before FA2016 was enacted. Further guidance is available at CG64081.