FACTS ABOUT VCTs

  • Although individually, small companies generally have a higher risk profile than larger ones, investing in a broad portfolio of different businesses should reduce the overall level of risk of a VCT.
  • An extensive range of tax-related benefits enhances the returns achieved by VCTs.

TAX FAQs

  • What are the tax benefits of subscribing for VCT Shares?

    Individuals who subscribe for new VCT shares can take advantage of a number of tax benefits, including:

    • Income tax relief of 30% on the initial investment, providing shares are held for a minimum of 5 years (different reliefs applied to VCT share subscriptions made prior to 6 April 2006).
    • No capital gains tax on the disposal of VCT shares
    • Capital gains on underlying investments can be paid out as tax free dividends

    Tax relief is only available to UK tax payers, on amounts invested up to a maximum of £200,000 per person, per tax year, and is restricted to the amount which reduces the investor’s income tax liability to nil.

  • How do I obtain Tax Relief?

    Once shares have been allotted, investors will receive both a share certificate and a tax certificate. The tax certificate will be needed to claim income tax relief. Tax relief can be claimed by entering the VCT investment amount in the “Other tax reliefs” section on your tax return.
    Alternatively, if you pay tax under PAYE, and want the relief immediately, you can contact your Tax Office in order to adjust your tax code.

    Tax relief on subscriptions for shares in a VCT is restricted where, within six months (before or after) that subscription, the investor had disposed of shares in the same VCT. Existing Shareholders should be aware that the sale of existing Shares in the VCT within these periods could, therefore, put their income tax relief relating to a new Offer at risk.

    For further clarification, please see the
    HMRC website: http://www.hmrc.gov.uk/guidance/vct.htm#2

  • Can I obtain tax relief on shares issued under the Dividend Reinvestment Scheme?

    Shareholders in ProVen VCT or ProVen Growth & Income VCT, who are enrolled onto the DRIS, are entitled to claim tax relief of 30% on new Ordinary shares issued under the scheme (providing the share issue does not take the amount subscribed for VCT shares during the tax year to over £200,000).

Please note: This does not constitute personal tax advice. Please contact your financial, or tax, adviser if you have any questions about your personal tax circumstances. Beringea is not authorised to give personal tax advice.