Entrepreneurs' relief: joint venture companies

The terms “holding company”, “trading company” and “trading group” have the same meanings as for the purposes of holdover relief for gifts of business assets, although with effect from 18 March 2015, whether a company is a trading company or the holding company of a trading group will be determined by reference to that company's own activities (or the activities of group companies). No account is taken of activities carried on by joint venture companies which a company is invested in, or of partnerships of which a company is a member44. “Holding company” is a company that has one or more 51 per cent subsidiaries45. “Trading company” is a company carrying on trading activities which does not carry on other activities to a substantial extent46. “Trading activities” include activities in preparing to start or acquire a trade, the carrying on of the trade itself and those with a view to acquiring a significant interest in the share capital of a trading company or the holding company of a trading group which is also not a member of the same group as itself47.

A significant interest in the share capital of a company is (i) one that would make the held company a 51 per cent subsidiary of the holder; or (ii) one that would give the holder a qualifying shareholding in a joint venture company without making the held joint venture company part of the holder's group48. A qualifying shareholding in a joint venture company is 10 per cent or more of the ordinary share capital of the joint venture company (whether that holding is held by a single company or members of the same group)49.