Taxation of Chargeable Gains Act 1992 Schedule 7AC paragraph 7

The requirement

Paragraph 7 sets out the holding period requirement that must be satisfied for the substantial shareholding exemption to apply when a company disposes of shares in another company.

• The investing company must have held a substantial shareholding (at least 10% of ordinary share capital) in the company invested in for a continuous period of at least 12 months.
• That 12-month period must have begun no more than six years before the date of the disposal.
• The requirement does not need to be met at the exact point of disposal — there is a six-year lookback window, allowing disposals in tranches over time after the holding drops below 10%.
• In most straightforward cases, where a company sells its entire holding at once, the requirement is met if the 10% threshold has been maintained for at least 12 months up to the date of the sale.