Taxation of Chargeable Gains Act 1992 Schedule 7ZA paragraphs 21–23

Voting rights test

Section 21–23 sets out how to determine whether a person passes the voting rights test in relation to a partnership, by calculating the combined direct and indirect voting rights percentages and requiring a minimum threshold of 5%.

• A person passes the voting rights test if their combined direct and indirect voting rights percentages in the partnership total at least 5% throughout the relevant period.
• Direct voting rights are calculated by adding together the percentages of voting rights the person holds directly in each direct interest company that is a member of the partnership.
• Indirect voting rights are calculated using the formula T × X × 100, where T is the person's fraction of voting rights in the direct interest company and X is that company's fraction of voting rights in the relevant corporate partner.
• Where a direct interest company or a fellow group member holds more than 50% of the voting rights in another company, it is treated as holding all of that company's voting rights for the purposes of the indirect calculation.

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