VCTs & EISs – Clampdown If Just Targeting Tax Relief

21 Mar

George Osborne confirmed the government will roll out a new disqualifying purpose test to exclude companies set up for the sole purpose of accessing tax relief.

 The purpose of VCTs and EIS’ is to help smaller higher-risk trading companies to raise finance by offering a range of tax reliefs to investors who purchase new shares in those companies, as opposed to taking advantage of the generous tax breaks on offer.

The consultation will come as a blow to some feed-in-tariff VCT and EIS providers. The Government will also introduce a new disqualifying purpose test to exclude companies set up for the purpose of accessing relief, exclude acquisition of shares by a qualifying company in another company, and exclude investment in some Feed-in Tariff businesses.

The good news :-

VCTs

  • from April 2012 the investment universe for VCTs (Venture Capital Trusts) will be widened. 
  • £1.0 Million investment limit per company rule has been lifted
  • VCTs will have the option to invest larger (actually unrestricted amounts) into a small business

EISs

  • EIS tax relief allowance to be doubled to £200,000.

 

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