VCT: investor income tax reliefs: ‘front-end’ income tax relief: assessments and claims cases
Income from employment
HMRC officers should give relief as a tax adjustment.
Enter the total amount on which relief is due, for example £5,000, then compute the tax adjustment at the appropriate rate, for example ‘Venture Capital Trust £10,000 @ 30% = £3,000.00’.
The appropriate rates are:
- 20% for shares issued up to 5 April 2004,
- 40% for shares issued between 6 April 2004 and 5 April 2006, and
- 30% for shares issued on or after 6 April 2006 onwards.
Income from self employment
There is no assessing descriptor for ‘front-end’ Income Tax relief. HMRC officers must therefore:
- include the relief due as a tax adjustment,
- use the abbreviation ‘sundry’,
- include an explanation in the ‘notes’ field.
HMRC officers should give relief in the repayment computation (Function CL):
- include the relief as a tax adjustment using the abbreviation ‘sundry’ (RM2560),
- send a letter of explanation to the taxpayer.