Income Tax Act 2007 section 264

No entitlement to relief if there is a linked loan

Section 264 denies VCT income tax relief where the investment is connected to a loan arrangement, and Schedule 2 paragraph 61 modifies the relevant period for shares issued before 6 April 2006.

• VCT relief is denied where the share subscription is linked to a loan made to the investor or an associate.
• A "linked loan" is one that would not have been made, or would not have been made on the same terms, without the share subscription.
• The restriction applies if the linked loan is made or received during a defined "relevant period" surrounding the share issue date.
• For shares issued before 6 April 2006, the relevant period ends on the third anniversary of the share issue date, rather than the fifth anniversary that applies to later issues.