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DEPTH AND DETAIL
How do these risks and benefits interact, how do the managers try to mitigate the issues they face, what are some of the additional,
existential risks, what are some of the unique considerations that advisers and investors need to keep in mind?
LEGISLATIVE CHANGES
This section has been promoted to give it more prominence after the July Budget. The VCT sector has always been subject to rule changes
as the Treasury has tweaked the scheme to ensure that it represents value for money for the UK taxpayer (see Policy Changes Timeline on
page 88 for a full list of the changes since inception), but perhaps the most sweeping changes to qualifying companies were announced
this year in order to comply with European State Aid rules. These changes represent significant upheaval for some VCT managers.
PRE-MARCH 2015
BUDGET 2015
SUMMER BUDGET
AGE LIMIT
No limit
12 years*
7 years*
LIFETIME CAP
No limit
£15m
£12m
ANNUAL
INVESTMENT LIMIT
£5m
£5m
£5m
EMPLOYEE LIMIT (FTE)
250
250
250
KNOWLEDGE
INTENSIVE
COMPANIES
LIFETIME
CAP
No limit
£20m
£20m
EMPLOYEE
LIMIT
250
500
500
AGE LIMIT
No limit
12 years
10 years*
USE OF EIS & VCT MONEY
FOR ACQUISITIONS OF
BUSINESS
Allowed
Allowed
New rules to prevent EIS and
VCT funds being used to acquire
existing businesses
GROWTH &
DEVELOPMENT
No requirement
Require that all investments are
made with the intention to grow
and develop a business
Require that all investments are
made with the intention to grow
and develop a business
SEIS MONEY
70% of SEIS money be
deployed before raising EIS
70% limit removed
No limit
EXISTING
SHAREHOLDERS
No restriction
For EIS only, a requirement that
investors are independent from
the company at the time of
the first share issue (excluding
founder shares)
For EIS only, a requirement that
investors are independent from
the company at the time of
the first share issue (excluding
founder shares)
*Unless total investment represents more than 50 per cent of the company’s turnover over the preceding five years
OUTLINE OF THE CHANGES PROPOSED IN 2015