Taxation of Chargeable Gains Act 1992 Schedule 7AC paragraph 1

The main exemption

Section 1 of Schedule 7AC sets out the main exemption under the substantial shareholdings exemption regime, which can exempt from tax a gain arising when a company disposes of shares in another company.

• Where a company (the "investing company") sells shares or an interest in shares in another company (the "company invested in"), any gain on that disposal is not a chargeable gain, provided the requirements of Schedule 7AC are met.
• The two key requirements are: first, the investing company must hold a substantial shareholding in the company invested in; and second, the company invested in must satisfy certain conditions set out in Part 3 of the Schedule.
• If both requirements are satisfied, the gain is completely exempt from corporation tax on chargeable gains.
• However, the exemption does not apply in certain specified circumstances and excluded cases set out elsewhere in the Schedule.