Selling a subsidiary
A group selling one of its trading subsidiaries.
Substantial Shareholding Exemption
Selling a subsidiary? The gain may be exempt.
When a company sells shares in a trading company or group, the Substantial Shareholding Exemption (SSE) can take the gain completely out of corporation tax. But the conditions are specific, and trading status is tested at the time of sale. We make sure the exemption is there when you need it.
When SSE matters
Selling a stake
A company selling a holding of 10% or more in another trading company.
Holding company structures
Owners who've put a holding company above the trading business, so it can sell the trading company rather than the owners selling personally.
The conditions
- Size of holding: at least 10% of the ordinary share capital, with a matching entitlement to profits and assets.
- Holding period: held for a continuous 12-month period within the six years before the sale.
- Trading status: the company being sold must be a trading company, or the holding company of a trading group.
Non-trading activities, such as property investment or large cash balances, can put trading status at risk, just as they can for Business Asset Disposal Relief.
How we help
- Confirming whether SSE applies to a planned sale, and what could put it at risk.
- Pre-sale restructuring to put SSE in place, including holding company insertions and demergers.
- Dealing with non-trading assets before the sale.
- Advising on how the proceeds can then be used or extracted.
FAQs
Frequently asked questions
What is the Substantial Shareholding Exemption?
It exempts a company's gain on selling shares from corporation tax, where the company has held a substantial shareholding in a trading company or group. It applies automatically if the conditions are met.
What are the main conditions?
Broadly, the selling company must have held at least 10% of the ordinary share capital, with a matching entitlement to profits and assets, for a continuous 12-month period in the six years before the sale. The company being sold must be a trading company, or the holding company of a trading group.
Can SSE apply if we restructure before selling?
Often, yes. Inserting a holding company or reorganising a group can put SSE in place for a future sale. The timing and the trading status of the company being sold need careful review.
What happens if SSE doesn't apply?
The gain is taxed at the normal corporation tax rate. Equally, a loss on a disposal that qualifies for SSE isn't allowable, so it's worth confirming the position either way.
Related advice
You may also need
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Read moreHMRC Clearances
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Planning to sell a subsidiary or stake?
Check the SSE position early, while there's still time to put it right.
Or write to taxadvisory@aswatax.co.uk
Last reviewed 6 October 2026
