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HMRC internal manual

Venture Capital Schemes Manual

CT: investor CG disposal relief: exemption from CGT

TCGA92/S151A (1) & (2)

Gains on the disposal of ordinary shares in a VCT are not chargeable to CGT and losses on such a disposal are not allowable providing all the conditions listed below are satisfied.

  • The company was a VCT both when the investor acquired the shares and when he or she disposed of them. The earliest date on which a company can get approval as a VCT is 6 April 1995. That is the earliest date on which an investor can acquire exempt shares.
  • The disposal is by an individual.
  • The individual was aged 18 or over at the date of disposal.
  • The shares were acquired for commercial reasons and not as part of a tax avoidance scheme. This restriction is only likely to apply in exceptional circumstances. For example, where artificial arrangements are made to convert shares which do not qualify for exemption into shares which do. Any cases in which you think this restriction may apply must be referred to CTIAA (Structure, Incentives & Reliefs team). HMRC officers should not comment on the possible application of the restriction until they have received advice from CTIAA.
  • The value of all the VCT ordinary shares acquired during a tax year by a taxpayer does not exceed £100,000 for each tax year up to 2003-04 and £200,000 for 2004-05 onwards. For further guidance see VCM52040. For guidance on the interaction with deferral relief on reinvestment see VCM53070.