Taxation of Chargeable Gains Act 1992 Schedule 1A paragraph 5

Exception in relation to interests in UK land used for trading purposes

Schedule 1A paragraph 5 provides a trading purposes exception to the rule that a disposal of a right or interest in a company is treated as a disposal of an asset deriving at least 75% of its value from UK land.

• Where a company's qualifying assets derive their value from UK land that is wholly used for trading purposes, the disposal of a right or interest in that company is not treated as a disposal of an asset deriving 75% or more of its value from UK land.
• An interest in UK land counts as "used for trading purposes" if, at the time of disposal, it is being used in or acquired for use in a qualifying trade — one carried on commercially for profit by the company or a connected person for at least one year, with a reasonable expectation of continuing.
• The exception still applies even if some UK land interests are not used for trading purposes, provided those non-trade interests are "low-value" — meaning their total market value is no more than 10% of the total market value of the trade-related UK land interests.
• Both the historical trading record (one year of commercial trading for profit) and the forward-looking prospect of continued trading must be satisfied for a trade to qualify.