VCT

Question 1

What factors would you consider before investing in either an EIS or VCT (?)

Answer 1

1) Timescale for investment
* Income need or growth
* Previous/future CGT liability
* If IHT is a priority
* Attitude to risk/capacity for loss
* Current & previous tax year IT liability

Question 2

What is the limit IT relief on new investments in VCT?

Answer 2

30% up to £200,000 per year (must be over 18)

They must be help for 5 years to benefit from income tax relief.

Question 3

What is the CGT on the sale of VCT shares?

Answer 3

There is no CGT to be paid on a VCT.

There is no minimum holding period for this benefit.

HOWEVER there is no CGT DEFFERRAL like in a with a EIS.

Income tax relief is withdrawn if shares disposed of within 5 years (unless given to spouse or on death).

Question 4

What is the tax treatment of VCT dividends?

Answer 4

There is no income tax to be paid on VCT dividends.

Question 5

What is the cap on investment a company can receive from a VCT and EIS?

Answer 5

£12,000,000

Question 6

what is the maximum number of employees for a VCT and EIS?

Answer 6

VCT AND EIS must have fewer than 250 employees. 500 for knowledge intensive companies. (25 in SEIS)

Question 7

EIS and VCT companies maximum GROSS assets?

Answer 7

£15m before investment and not more than £16m afterwards.

A SEIS company can only have assets
of up to £350,000.

Question 8

How are VCT viewed for risk perspective compared to a EIS?

Answer 8

a VCT is likley to invest in companies that satisfy EIS conditions, so they may carry less risk.

Question 9

Do VCT benefit form IHT relief?

Answer 9

NO