VCT guidance

Following requests for clarification, HMRC have published a note to explain their view on the tax treatment of Venture Capital Trusts (VCTS) and investors in VCTs say Harris & Co accountants Northampton

In return for meeting certain conditions, approved VCTs enjoy exemption from corporation tax on chargeable gains and VCT investors enjoy a number of tax reliefs including exemption from income tax on dividends from ordinary shares in VCTs and disposal relief on any capital gains made on disposal of VCT shares.

The note sets out the conditions a company must satisfy for HMRC to approve it as a VCT for an accounting period and, in particular, clarifies when a VCT might lose its approval status. It also covers the consequences of losing approval and the right of appeal.

The note does not represent a change in policy or in HMRC’s application of the conditions for VCT approval.