Glossary · UK
What is Substantial Shareholdings Exemption (SSE)?
A CGT exemption allowing companies to sell shares in another company tax-free if they have held at least 10% for 12 months.
Full Definition
The Substantial Shareholdings Exemption (SSE), introduced in 2002 and now governed by Schedule 7AC TCGA 1992, exempts a trading company (or member of a trading group) from Corporation Tax on gains arising from the disposal of shares in another company. The conditions are: the investor company must have held at least 10% of the ordinary share capital for a continuous period of 12 months in the 6 years preceding the disposal; both the investor and investee companies must be trading companies (or members of a trading group) at the time of disposal. From April 2017 the investee company condition was relaxed for qualifying institutional investors. SSE is particularly important for private equity and corporate venture capital structures, as it means gains on successful exits are sheltered from the standard 25% Corporation Tax rate.