Taxation of Chargeable Gains Act 1992 Schedule A1 paragraph 4

Conditions for shares to qualify as business assets

Paragraph 4 of Schedule A1 sets out the conditions that must be met for shares in a company to qualify as business assets for the purposes of taper relief.

• Shares must be in a qualifying company, which generally means a trading company or the holding company of a trading group, and certain conditions must be satisfied throughout the relevant period of ownership.
• The qualifying conditions relate to the nature of the company's activities — it must be carrying on a trade or business, rather than primarily holding investments or non-trading assets.
• Different rules may apply depending on whether the shareholder is an officer or employee of the company, or simply holds shares as an outside investor, with more favourable treatment typically available to those actively involved in the business.
• These conditions were amended by the Finance Act 2008, Schedule 2, paragraph 45, as part of the broader reforms to capital gains tax and the replacement of taper relief with a flat rate of capital gains tax from April 2008.