Venture Capital Trust scheme
HMRC have issued updated guidance on the Venture Capital Trust (VCT) scheme to reflect HMRC’s view of the legislation as it currently stands.
The VCT scheme was designed to encourage individuals to invest in small, usually high risk, trading companies that do not trade on a recognised stock exchange. Instead, a VCT listed on the London stock exchange invests in smaller trading companies helping to provide funds for the businesses to grow and develop.
Taxpayers who invest in VCT schemes benefit from substantial income tax and capital gains tax reliefs. The VCTs themselves are exempt from corporation tax and on gains arising from the disposal of their investments. Relief is usually available to individuals investing up to a maximum of £200,000 during each tax year.
A number of changes to the operation of VCTs were announced in the last Labour Budget. However, these measures were dropped before the Finance Bill received Royal Assent in early April. Whether these changes will now be enacted depends on what the new Chancellor decides to do in this regard.