Income Tax (Earnings and Pensions) Act 2003 Schedule 5 paragraph 15

Meaning of "qualifying trade"

Section 15 of Schedule 5 defines what constitutes a "qualifying trade" for the purposes of the enterprise management incentives (EMI) share option scheme provisions.

• A trade must be conducted on a commercial basis with a view to making profits to be a qualifying trade.
• The trade must not consist wholly or substantially of excluded activities.
• Research and development activities intended to give rise to or benefit a connected qualifying trade count as carrying on a qualifying trade, but merely preparing to carry on such R&D does not.
• A "connected qualifying trade" is one carried on by the company performing the R&D itself, or by another member of the same group.