Taxation of Chargeable Gains Act 1992 section 151A

Venture capital trusts: reliefs

Section 151A provides capital gains tax relief for individuals who dispose of ordinary shares in a venture capital trust, exempting qualifying disposals from both chargeable gains and allowable losses.

• A gain or loss on a qualifying disposal of ordinary shares in a VCT is exempt from capital gains tax, provided the company was a VCT both when the shares were acquired and when they were disposed of.
• A disposal qualifies for relief only if the individual is aged 18 or over, the shares were acquired within the permitted annual maximum (the first £200,000), and the shares were acquired for genuine commercial purposes rather than as part of a tax avoidance arrangement.
• When determining whether shares were acquired in excess of the permitted maximum, shares acquired earlier are treated as disposed of first, and shares acquired in excess of the limit on any given day are treated as disposed of before other shares acquired that day; shares acquired when the company was not a VCT are always treated as disposed of first.
• Ordinary shares means any shares forming part of the company's ordinary share capital as defined by section 989 of the Income Tax Act 2007.