Autumn Statement 2013: Venture capital trust share buy backs

Income tax relief is available on investments in venture capital trusts (VCT).

A consultation document was published in July 2013 considering ways to tackle arrangements involving VCTs repurchasing their shares conditional on the investor reinvesting in the same VCT within a short space of time.

As a result, with effect from April 2014, income tax relief will not be available for VCT investments where:

  • They are conditionally linked in any way to a VCT share buy-back; or
  • A new investment is made within six months of a disposal of shares in the same VCT.

The government will also consult on potential changes to VCT rules to address the use of a share premium account to return capital to investors where that return does not reflect profits on the VCT’s investments.

These changes aim to restrict buy backs to situations where the investors genuinely wish to exit from their investment in the VCT.

For more information or to discuss the changes contact the TaxDesk on 0845 4900 509 and ask for Paul Howard.