VCT guide

54 55 CASE STUDIES CASE STUDIES subscribed for shares £100,000 she receives on her subscription £30,000 valuation £50,000 5 YR The underlying companies in the VCT perform poorly, and the VCT investment is now worth £50,000. VCT VCT £50,000 £30,000 £80,000 ISA It should be remembered that any loss made on the disposal of VCT shares where the conditions for VCT Disposal Relief were met are not allowable for capital gains purposes. without relief £50,000 £20,000 LOSS with relief The tax relief limits the loss She retains her shares for five years to ensure she retains her tax relief and then sells them for £50,000. But her total proceeds, including her £30,000 tax relief, are £80,000. The tax relief has meant that her losses are much less severe (without the tax relief she would have lost £50,000, however, in this situation she has lost £20,000). 5 VCT income tax relief cushioning the blow of any losses Amanda has maximised her pension contributions and has income tax liabilities she wishes to mitigate. She subscribes for shares in a VCT at a cost of £100,000. Amanda takes professional advice as she is looking for a tax- efficient investment. Her adviser recommends investing into VCTs