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HMRC internal manual

Venture Capital Schemes Manual

VCT: VCT approval: 70% qualifying holdings condition: disregard of disposals: qualifying holdings received


A new qualifying holding for the purpose of S280A is a holding that itself forms part of the VCT’s qualifying holdings at the time that it is acquired. The most usual examples will be shares or securities acquired in share exchanges or reorganisations.

If new qualifying holdings are received as part of the consideration for the disposal of a qualifying holding, the proportion of the holding treated as retained under S280A(2)(a) is calculated using the formula:

(TC- NQH) ÷ TC


  • TC is the market value (at the time of the disposal) of the total consideration for the disposal, and
  • NQH is the market value (at that time) of the new qualifying holdings.

Disposal of qualifying holding - consideration received includes new qualifying holdings


A VCT with full approval has qualifying holdings of £1.5m and total investments of £2m. Its qualifying holdings are therefore 75% by value of its total investments.

On 31 July 2008 it disposes of a qualifying holding that it has held for more than 6 months. The holding was previously valued at £200,000 and is disposed of for consideration valued at £250,000 comprising £200,000 in cash and £50,000 in shares that will be qualifying holdings in the hands of the VCT.

  Qualifying Holdings(QI) Total Investments (TI) QI/TI x 100%
Before disposal £1.5m £2.0 75%

Disposal: 10 April 2007

Original cost: £200,000

Total Proceeds: £250,000

Proceeds comprise:

  • £200,000 in cash (monetary), and
  • £50,000 in qualifying shares (non-monetary).

After disposal

  Qualifying Holdings(QI) Total Investments (TI) QI/TI x 100%
Before the application of S280A £1.35m £2.05m 66%