Tax benefits

In the 2006 budget, the Chancellor announced the following changes to VCTs for the 2006/07 tax year:

• 30% income tax relief
• VCT shares must be held for 5 years

These changes do not apply to investments in VCTs in the 2005/06 tax year. For full details, read the HMRC press release.

VCTs offer a number of valuable tax benefits, which, from 6th April 2006 include the following:

• Income tax relief of 30% on initial investment, provided that the shares are held for a minimum of 5 years
• No capital gains tax on disposal of VCT shares
• All dividends are tax free
• High ceilings of £200,000 per tax year on investment qualifying for tax relief
• Capital gains on underlying investments can be paid out as dividends