Income Tax (Trading and Other Income) Act 2005 section 142

Venture capital trust dividends: shares acquired before the tax year 2004-05

Section 142 deals with the reduced annual acquisition limit that applies when determining the tax exemption for venture capital trust dividends paid on shares acquired before the 2004-05 tax year.

• Dividends from venture capital trusts can be exempt from income tax, subject to an annual acquisition limit on the value of shares purchased
• For shares acquired before the 2004-05 tax year, the annual acquisition limit is halved from £200,000 to £100,000
• Only dividends on shares within the applicable annual limit qualify for the tax exemption
• The reduced limit applies regardless of when the dividends are actually paid, provided the underlying shares were acquired before 2004-05