What is a major participant under section 160 of TIOPA 2010?

A person is a major participant in another person's enterprise if they and at least one other person together control a body corporate or firm, and each member of the pair individually holds at least 40% of the combined holdings, rights and powers by which they exercise that control. This triggers indirect participation treatment under United Kingdom tax law.

How does the 40% test work under section 160 TIOPA 2010?

The 40% test requires that two persons together control a subordinate entity and that each person holds at least 40% of the total holdings, rights and powers conferring that control. If one person holds less than 40% of the combined stake, they are not a major participant. For example, a 45%/55% split satisfies the test, but a 30%/70% split does not.

How are rights and powers attributed when applying the major participants test?

Under section 160, each person is credited with rights and powers that would be attributed to them under section 159(2), covering indirect participation through connected persons, nominees and intermediaries. This ensures the test captures rights held indirectly through chains of ownership or control, not just those held directly by the person being assessed.

Are joint rights and powers counted under the section 160 major participants rule?

Yes. Any rights or powers that a person can exercise only jointly with one or more other persons are still treated as that person's own rights and powers for the purposes of section 160. This also extends to rights a person is entitled to acquire in the future, even if those rights would only be exercisable jointly with others once acquired.

Taxation (International and Other Provisions) Act 2010 section 160

Indirect participation: one of several major participants

Section 160 sets out the rules for determining when a person is treated as indirectly participating in the management, control or capital of another person by virtue of being one of several major participants in that other person's enterprise.

A person is an indirect participant in another person's enterprise if they are one of a number of major participants in that enterprise.
A person is a major participant if they and at least one other person together control a body corporate or firm, and each of the pair holds at least 40% of the combined holdings, rights and powers that give them that control.
When determining whether two persons together control the subordinate entity, and whether the 40% threshold is met, each person is credited with any rights and powers that would be attributed to them under the indirect participation rules in section 159.
Rights and powers that a person can only exercise jointly with others still count as that person's rights and powers for the purposes of this test.

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