VCTs Benefit In UK Budget

by Jason Gorringe, Tax-News.com, London

28 March 2006

In addition to other measures unveiled in last week's Budget Speech, UK Chancellor, Gordon Brown outlined a package of changes designed to improve the effectiveness of the country's three tax-based venture capital schemes - the Venture Capital Trust (VCT) scheme, the Enterprise Investment Scheme (EIS) and the Corporate Venturing Scheme (CVS).

This package includes a new rate of 30 per cent income tax relief for investments in VCTs, an increase on the 20 per cent rate to which the relief was due to return for the 2006-07 tax year.

"Growing companies need venture capital. So I will refocus tax incentives for venture capital, with a 30 per cent relief for investments in venture capital trusts. From today twice as much investment as before will be eligible for income tax relief in enterprise investment schemes," he explained.

Relief for investment in EIS will remain at 20%, but investors will now be able to claim relief on investments of up to GBP400,000 per year.

However, the maximum size of company that can raise money this way in has been reduced to those with gross assets of GBP7 million (down from GBP15 million previously).

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