Taxation of Chargeable Gains Act 1992 section Schedule A1 paragraph 11A

Periods of share ownership not to count if company is not active

Paragraph 11A of Schedule A1 deals with the requirement that a company must be actively trading during the period of share ownership for that period to count towards the qualifying holding period for entrepreneurs' relief (now business asset disposal relief).

• For the qualifying holding period to be met, the company must be a trading company (or the holding company of a trading group) throughout the relevant period of ownership.
• Any period during which the company is not actively trading — for example, if it is dormant, an investment company, or otherwise not carrying on a qualifying trade — does not count towards the required minimum holding period.
• This rule prevents shareholders from claiming relief where shares have been held for the requisite period on paper, but the company was not genuinely active for all or part of that time.
• The provision was introduced by Finance Act 2008, Schedule 2, paragraph 45, as part of the broader framework establishing the conditions for entrepreneurs' relief on disposals of shares.