Shake-up for VCT rules

13 january 2013

 

PRIVATE investors in tax-efficient venture capital trusts (VCTs) must wait until the summer to find out whether the schemes will be hit by a proposed cap on new funding.

VCTs are listed companies that invest in small, higher-risk British firms. They offer 30% income tax relief on investments of up to £200,000 a year, as well as tax-free dividends and capital gains.

Advisers say they have become increasingly popular since the annual allowance for pension contributions was cut from £255,000 to £50,000 in April 2011.

However, under measures included in the finance bill, VCTs could lose their tax benefits as a result of a new cap being imposed on state-backed investment sources by the European Commission.