A qualifying trade is one which is conducted on a commercial basis with a view to realising a profit.

The activities of a single enterprise must not consist of ‘non-qualifying activities’. Activities carried on for incidental purposes which would have no significant effect on the company's activities as a whole, are ignored. HMRC will regard activities as not being substantial if they are less than 20% of the whole.

An enterprise which is a parent company of a group will meet the criteria if the business of the group as a whole does not substantially involve non-qualifying activities.

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