VCT, EIS & SEIS Flashcards
What is a VCT?
how is it listed, what is special about it?
A VCT is a company listed on the LSE which allows investors to indirectly invest in small companies
It has preferential tax treatment (and therefore VCTs require approval from HMRC)
How is income tax treated on VCTs?
1) 30% relief on £200k (£60k income tax relief max)
2) Must be held for 5 years (or relief is withdrawn)
3) Relief is not lost on transfer to spouse or death
How is CGT treated for VCTs?
CGT is not chargeable on VCTs with no minimum holding period
How are dividends treated for VCTs?
Dividends are tax free on VCTs (no minimum period)
What is the maximum annual investment in a VCT?
£200,000
What is an EIS?
Govt scheme designed to help smaller, high risk companies raise capital
What is the income tax treatment on EISs?
% relief & max investment
1) 30% relief on purchase price
2) max investment £1mil (2mil if investing in knowledge intensive companies)
When is income tax relief withdrawn from an EIS?
1) dispose of holding before 3yrs
2) become connected to the company
How does the income tax relief on a VCT & EIS differ?
EIS relief can be carried back one year
How can other CGT liabilities be helped by an EIS?
Other gains arising can be invested into an EIS share in order to defer the liability
EIS investment must be made 1 year before, or within 3 years after the gain
How is CGT treated on EIS investments?
1) 0% CGT
2) Must have claimed income tax relief
3) must have held for 3 years
What is an SEIS?
A govt scheme to encourage investment in very early stage companies
What is the income tax relief on an SEIS?
relief level & max investment & holding period
50% relief on income tax
max investment of £200k (max relief of £100k)
must hold for 3 years
How are other gains improved by SEIS investments?
50% of the gain is releived if the gain is reinvested into an SEIS
this is called reinvestment relief
How is CGT treated on an SEIS?
50% relief up to a maximum of £50k
Can set any SEIS loss against a gain (minus income tax relief)
