Section 27: Substantial Shareholding Exemption; Section 28: Substantial Shareholding Exemption: Institutional Investors

Where certain requirements are met, the UK substantial shareholding exemption (the SSE) has the effect of automatically exempting any gain (or disallowing any loss) arising on the disposal of shareholdings from the scope of UK corporation tax on chargeable gains.

Since the introduction of the SSE by the UK Government (the Government) in April 2002, businesses have had to contend with a number of practical drawbacks to its application and various inherent complexities. These drawbacks and complexities can, in practice, deter the structuring of operations and investments through the UK. In May 2016 the Government published a consultation document setting out a number of options for reform of the SSE. Draft legislation to implement such reform was published on 5 December 2016 (the Draft Legislation), such legislation being amended in March 2017.

Section 27 (substantial shareholding exemption) and section 28 (substantial shareholding exemption: institutional investors) of the Finance (No.2) Act 2017 (F(No.2)A 2017) amends the existing SSE and introduces a broader exemption for disposals by certain entities. Read more.