Taxation of Chargeable Gains Act 1992 section Schedule 7AC paragraphs 3A–3B

Subsidiary exemption: qualifying institutional investors

Section Schedule 7AC paragraphs 3A–3B provide relief from chargeable gains (or losses) on disposals of substantial shareholdings where qualifying institutional investors own a significant proportion of the investing company.

• Where qualifying institutional investors own 80% or more of the investing company's ordinary share capital immediately before the disposal, the gain or loss is fully exempt
• Where qualifying institutional investors own at least 25% but less than 80%, the gain or loss is reduced by the percentage of ordinary share capital they own
• A "disqualified listed company" — one whose shares are listed, and which is neither a qualifying institutional investor nor a qualifying UK REIT — cannot benefit from these rules
• Ownership of ordinary share capital can be direct, indirect, or a combination of both, and shares held through partnerships are attributed proportionately to each partner