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HMRC internal manual

Venture Capital Schemes Manual

VCT: investor CG deferral relief: rights issues

TCGA92/S151B (4)

Any shares acquired on a rights issue may qualify for disposal and/or deferral relief. Section 151B (4) disapplies the share reorganisation rules if a rights issue involves an issue of shares falling within (a), (b) or (c) of VCM53300. This means that the investor is treated as having acquired the new shares at the date of the rights issue and for the amount they paid for the new shares. Disposal and/or deferral relief (where the rights issue takes place on or before 5 April 2004) may be available on the new shares provided that the investor’s total acquisitions for the tax year in which the rights issue is made do not exceed the permitted maximum for that year.


An investor has a holding of 10,000 shares in a VCT. In July 1997 the company declares a 1 for 10 rights issue at a cost of £2 per share. The investor takes up his or her full rights. There are no other transactions involving VCT shares. The new shares qualify for disposal and deferral relief. The investor is treated as having acquired these shares in July 1997 at a total cost of £2,000.