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HMRC internal manual

Venture Capital Schemes Manual

From
HM Revenue & Customs
Updated
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VCT: investor income tax reliefs: ‘front-end’ income tax relief: who can claim relief

ITA07/S261

Individuals aged 18 or over who subscribe on their own behalf for new ordinary shares in VCTs (‘investors’) are entitled to ‘front-end’ income tax relief on subscriptions up to the ‘permitted maximum’ of £200,000 for tax years 2004-05 onwards (£100,000 for previous tax years).

The reference to ‘tax year’ here means a year beginning on 6 April and ending on 5 April in the following year.

To retain the relief shares must be retained for a minimum holding period.

  • Shares issued before 6 April 2000 or after 5 April 2006 must be held for at least five years.
  • Shares issued between 6 April 2000 and 5 April 2006 must be held for at least three years.

The shares must, throughout this minimum holding period, carry no present or future preferential rights to dividends or to the VCT’s assets on winding up and no present or future rights to be redeemed.