VCTs—introduction, tax reliefs and returns

Published by a ��Ӱ�� Tax expert

Practice notes

VCTs—introduction, tax reliefs and returns

Published by a ��Ӱ�� Tax expert

Practice notes

FORTHCOMING CHANGE relating to the Venture Capital Trust (VCT) ‘sunset clause’ date: On 22 November 2023, the government announced that it will extend the existing sunset clause for the VCT scheme from 6 April 2025 to 6 April 2035. Finance Act 2024 enacts legislation to extend the availability of VCT reliefs to new shares issued before this date, where all the other relevant conditions are met. This measure comes into force on a day to be appointed in regulations.

For more information, see News Analysis: The Growth Plan 2022—Tax analysis—Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT).

Like the enterprise investment scheme (EIS), the VCT regime is designed to encourage investment in smaller, higher-risk trading companies. A VCT is a company (not a trust), approved by HMRC, whose shares are admitted to trading in such a way that they meet the listing condition explained in Practice Note: VCTs—VCT conditions for HMRC approval—The listing condition.

Individuals can benefit from a range of tax reliefs, and spread their investment risk, by subscribing for (or buying) shares

Jurisdiction(s):

United Kingdom

Key definition:

Shares definition

What does Shares mean?

The CA 2006 merely provides that a share is a share in the company's share capital. A company's share capital comprises the number of shares issued by it to investors either on or after incorporation. Those investors then become the shareholders in the company. A shareholder’s shares are their personal property. By contrast, the assets of a company are owned by the company itself. Owning shares does not entitle a shareholder to any property rights in the company's assets.

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