Obtaining Tax reliefs

a) Income Tax Relief

(i) The VCT will give a certificate to each investor which the investor may use to claim income tax relief, either by obtaining from the Inland Revenue an adjustment to his tax coding under the PAYE system, or by waiting until the end of the tax year and using his Self Assessment Tax Return to claim relief.

(ii) Dividends received on shares acquired in VCTs up to the qualifying maximum of £200,000 per tax year need not be shown in the investor’s Self Assessment Tax Return.

b) Investors not resident in the UK

Investors not resident in the UK should seek their own professional advice as to the consequences of making an investment in a VCT as they may be subject to tax in other jurisdictions as well as in the UK.

c) VCT relief’s may not be available if the investor takes out a loan specifically to subscribe in the VCT.

Consequences of loss of VCT status

a) For the VCT

The exemption from corporation tax on capital gains will not apply to any gain realised after the time from which VCT status is lost. Where provisional approval is lost, all gains realised over the period during which provisional approval was in force will be subject to corporation tax.

b) For Qualifying Subscribers

(i) Income tax relief on investment. If VCT approval is treated as never having been given, or if it is withdrawn before the shares have been held for five years, the relief will be withdrawn by the making of an assessment for the year of assessment for which the relief was originally given on an amount equal to that relief. Interest on overdue tax may arise.

c) For Qualifying Subscribers and Qualifying Purchasers

(i) Dividend Income. Dividend income will not be exempt from tax in respect of profits or gains arising or accruing in any accounting period at a time when VCT status has been lost. A notional tax credit equal to 1/9th of the net dividend paid will be available to offset against income tax due on the dividend.

(ii) Capital gains. If provisional VCT approval is withdrawn, approval is treated as never having been given. Gains and losses on shares in the VCT will be taxable and allowable in the ordinary way. If full VCT approval is withdrawn, the individual is treated as having disposed of his shares immediately before the status is lost, for market value at that time, and is treated as reacquiring them at that value immediately after the status is lost. Thus, any capital gains realised up to that date will be exempt from tax, but gains after that date will be taxable in the ordinary way.

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