Autumn Statement 2016: Substantial Shareholding Exemption (SSE) Reform

AS16: Substantial Shareholding Exemption (SSE) Reform

Investing company requirements are to be removed, and a more comprehensive exemption for companies owned by qualifying institutional investors introduced.


Head of Tax, Pensions and Legal Services

KPMG in the UK


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Following a consultation on potential reform to the Substantial Shareholding Exemption (SSE) rules changes will be made to simplify the rules, to remove the investing company requirements and to provide a more comprehensive exemption for companies owned by qualifying institutional investors.  These will be effective from 1 April 2017.

The removal of the investing company requirements will provide more certainty on the application of the rules.  It will no longer be necessary to determine whether the whole group is trading in order to conclude whether the SSE applies.  Once the substantial shareholding requirement is met, the determination will turn solely upon the character of the company being sold.  This should mean that the sale of a trading subsidiary by an investment group can qualify, and that an investment which would qualify for the exemption cannot subsequently cease to do so because of changes elsewhere in the investing group.

The “more comprehensive exemption” for companies owned by qualifying institutional investors will presumably include some additional relaxation of the company invested in requirements.  This might mean that property investment companies could qualify, but there is no detail at present.

The 1 April 2017 commencement date is most welcome, as Brexit has made it more important that the SSE can compete with participation exemptions in other jurisdictions.


Iain Kerr

Tel: +44 (0)20 7311 5621


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