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The IR loves technical terms and the important ones to understand in taper relief are as follows:

‘Qualifying holding period’. The percentage of gain chargeable depends on ‘the number of whole years’ in the qualifying holding period, which is simply the relevant period that the asset was owned by the seller. (Note that where an asset is acquired through an option, the qualifying holding period is deemed to be from the exercise of the option and not from the grant or acquisition of the option.)

‘Business asset’. Any asset may be a business asset if it is used for the purposes of trade, profession or vocation or employment and if certain conditions are met. The holding of shares is a business asset where the company concerned is a qualifying company.

‘Qualifying company’. A qualifying company is a trading company, or the subsidiary or the holding company of a trading company, where the relevant individual can exercise at least 25% of the voting rights in that company; or if it is a trading company and the individual owns at least 5% of the shares in the company and is working fulltime in the company. Difficulties can arise where the holding company has more than one subsidiary, some of which are not trading companies.

Trade’ and ‘trading company’. Trade is deemed to be anything that is considered by the IR as trade for the purpose of income tax, and a trading company is a company wholly engaged in trade. (Note that there can be practical difficulties in this definition for some private business owners.)