Summary of changes for VCT investors
in the Autumn Statement 2013
The Autumn Statement includes some significant developments for VCT investors which are outlined below.
Ending of Enhanced share buy-backs and time restrictions on re-investing in a VCT
Following on from a technical consultation over the summer, the Government has announced that new measures will be introduced from 6 April 2014 to prevent income tax relief being claimed on the purchase of new VCT shares where either:
• there is any link between the subscription for new shares and the disposal of VCT shares; or
• where an investor subscribes for new shares (other than through re-investing dividend payments) in a VCT within six months before or after selling shares in the same VCT.
The draft legislation can be found here:
HMRC has announced that from the date on which the Finance Bill 2014 receives royal assent investors will be able to claim income tax relief where new shares in a VCT are purchased through nominee accounts. This should simplify the application process for investors, and over time reduce the dependence that investors have on paper share certificates.
The government is concerned that use of share premium accounts to return some monies to investors is not in keeping with the intention of the legislation, and that some investors are receiving a tax-free return that has no relation to the investments made in SMEs. The government will run technical workshops with the industry to consult on this issue and appropriate solutions in January 2014.