This piece has been published as part of the first Adviser’s Guide to Venture Capital Trusts. For the full guide click here
It was announced in the Autumn Budget 2017 that the 2017/18 Finance Bill would include a new ‘principles based approach’ to identify lower risk activities that should not benefit from the tax reliefs. In accordance with the Finance Act 2018, the ‘risk-to-capital condition’ applies to investments made on or after 15 March 2018.
The Autumn Budget 2017 also included a welcome boost for VCT investments into knowledge-intensive companies. Knowledge-intensive companies (explained in greater detail in later sections) are those which are carrying out significant levels of research and development (R&D); these can qualify for higher amounts of VCT (and EIS) funding than other companies.
As a result, for VCT investments in knowledge-intensive companies made from 6 April 2018:
- The 12-month investment limits are doubled (from £5 million to £10 million per company).
- Greater flexibility has been provided to knowledge-intensive companies over how the age limit is applied.
Additional measures for all VCTs include:
- VCTs are no longer able to invest in companies under rules in place at the time funds were raised (but will have to invest under the rules currently in place); and
- VCTs have to invest more money in qualifying holdings.
This piece has been published as part of the first Adviser’s Guide to Venture Capital Trusts. For the full guide click here