Chapter 29 Venture Capital Trusts

Question 1

VCT

Answer 1

The income tax relief is the lower of the amount subscribed for the shares and £200,000, income tax relief is at 30%. There is no carry back claims for VCT. There is also an exemption given for dividends received on shares of a VCT, the dividends from the first £200,000 shares invested are exempt from tax.
A VCT is a company whose shares are traded on a regulated market. The VCT must ensure at least 80% of its investments are in shares in qualifying company. A VCT cannot invest more than 15% of its funds in one company and at least 85% of its profits must be distributed to shareholders
Clawback – withdrawal of income tax relief if the investor disposes of his shares in the first five years of issue. Disposal by way of gift (unless to a spouse) will result in clawback of all the relief. A sale of the shares within 5 years will result in a clawback of relief equal to 30% of sale proceeds.