Income Tax Act 2007 section 260

Other tax reliefs relating to VCTs

Section 260 acts as a signpost to the various other tax reliefs available in connection with Venture Capital Trusts (VCTs), covering income tax on dividends, capital gains exemptions for the trust itself, capital gains treatment on disposal of shares by individuals, and a historical deferral relief for shares issued before 6 April 2004.

• Dividends paid on shares in a VCT are exempt from income tax, provided certain conditions are met.
• Capital gains accruing to a VCT itself are not treated as chargeable gains, so the trust pays no capital gains tax on its investment profits.
• An individual who makes a qualifying disposal of ordinary shares in a VCT incurs neither a chargeable gain nor an allowable loss, provided the company was a VCT both when the shares were acquired and when they were disposed of.
• For shares issued before 6 April 2004 only, an individual's unused qualifying expenditure on VCT shares could be set against what would otherwise be chargeable gains, effectively deferring a capital gains charge.