The Government indicated in Budget 2013 that it was concerned that particular forms of share buy-back and reinvestment arrangements offered by VCTs were not in keeping with the intention of the legislation. It was also concerned about the use of share premium accounts to return capital to investors.
Legislation will be included in Finance Act 2014 to prevent VCTs from returning share capital to investors within three years of the end of the accounting period in which the VCT issued the shares. This will take effect with respect to shares issued on or after 6 April 2014.
VCTs will no longer be able to return capital to investors within three years of the issuance of the shares.