Enhancing Venture Capital Investments

Venture Capital Trusts (VCTs) Enterprise Investment Schemes (EISs) and Seed Enterprise Investment Schemes (SEISs) all received attention from the Chancellor in the Budget.  There were several changes:

  • As previously announced, the Chancellor shut down enhanced buy-backs schemes operated by many venture capital trusts (VCTs).  These schemes had allowed investors who had held their VCT share beyond the tax relief claw back period (currently five years) to sell and immediately repurchase their holdings with minimal expenses, but with the benefit of a new round of 30% tax relief.  Not quite what the Treasury intended …..
  • Companies claiming Renewable Obligations Certificates (ROCs) or Renewable Heat Incentive (RHI) subsidies from the government will be added to the long list of excluded businesses for VCTs, EISs and SEIs.  Companies claiming feed-in tariff were excluded in the 2011 Budget.
  • The SEIS will be made permanent – it originally was due to end in 2017.  The capital gains tax reinvestment relief – worth up to 14% of the investment – will also continue.
  • For VCTs, it will be possible to subscribe for shares via a nominee.  This will enable purchases to be made directly via investment platforms.

The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice. The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

11th April 2014