Investors’ Relief – a new tax break for Business Angels

 CGT, Investment Tax  Comments Off on Investors’ Relief – a new tax break for Business Angels
Nov 062016
 

Investors’ relief is a new CGT relief introduced by Finance Act 2016, designed for people who invest in unquoted trading companies without being involved in the management or operation of the business. These people cannot qualify for entrepreneurs’ relief on realising their investment, and so they wouldn’t expect to benefit from the special 10% rate – until now.

This is a tax relief which should be of particular interest to business angels. Although we already have other tax advantaged schemes, such as the venture capital schemes, they are too complicated and hedged with all sorts of rules and regulations. Investors’ relief is far simpler and should prove an attractive alternative for investors.

(This article can be downloaded in pdf format at Academia.edu)

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Jul 022015
 

In this article we take a look at the Venture Capital Schemes and ask whether the risks involved are really worth it. In particular we see there are two types of risk – investment risk and tax risk. Investment risk can lose you money, but losing the tax reliefs is not necessarily fatal.

This article was first published on linkedin. Continue reading »

Jun 022015
 

I’ve finally managed to update that table! It wasn’t easy getting it all on one page. Last time there were only three Venture Capital Schemes, now there are four, with the addition of the Social Enterprise Scheme. Soon we shall have a fifth in the form of the Social VCT. Continue reading »

Budget 2015 – Changes to the Venture Capital Schemes and EU State Aid

 Investment Tax, Venture Capital Schemes  Comments Off on Budget 2015 – Changes to the Venture Capital Schemes and EU State Aid
Apr 222015
 

UPDATE

This article was written shortly before the Summer Budget of 2015. Since then, some of the measures have been modified and are now enacted in F(No 2)A 2015, together with the introduction of a new blanket prohibition on using the funds raised to acquire shares in another company. For VCTs this puts a damper on the practice of raising money to finance management buy-outs.

One of the announcements made during Budget 2015 was a series of measures aimed at tweaking the Venture Capital Schemes so that they are in line with EU State Aid rules.

There are four Venture Capital Schemes, though the rule changes affect just two of them, the Enterprise Investment Scheme (“EIS”), and the Venture Capital Trust Scheme (“VCT”). The other two schemes are the Seed Enterprise Investment Scheme (“SEIS”) and the Social investment Tax Relief Scheme (“SITR”) introduced last year. Continue reading »

Venture Capital Trusts Part Four – What does the investment portfolio look like?

 Investment Tax, Venture Capital Schemes  Comments Off on Venture Capital Trusts Part Four – What does the investment portfolio look like?
Sep 042014
 

This is the fourth in our series of articles on venture capital trusts.

(This article can be downloaded in pdf format in portrait or landscape version at Academia.edu.)

In this article, we shall be exploring the conditions that describe what the portfolio looks like “on the outside” – the rules governing the type of investments that can be made, the way in which the company’s income must be distributed, and how much of the portfolio must be invested in the riskier class of assets that are the basis of the Venture Capital Scheme.

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Jan 202014
 

This is the third in our series of articles on venture capital trusts. In this article we shall look at the conditions relating to the VCT itself. In particular, we shall look at the way the VCT is structured as opposed to the way in which the business is run, or the conditions attached to the investments in the underlying portfolio. These topics are the subject of future articles in this series.

(This article can be downloaded in pdf format in portrait or landscape version at Academia.edu.)

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Autumn Statement 2013 Venture Capital Trusts and Share Buybacks

 Tax Avoidance, Venture Capital Schemes  Comments Off on Autumn Statement 2013 Venture Capital Trusts and Share Buybacks
Dec 172013
 

New rules are being introduced to restrict upfront relief, where an investor sells his shares back to the VCT and uses the proceeds to subscribe for another shareholding. In this way, one can have a series of share subscriptions, each one giving rise to tax relief, but with no fresh money actually going into the system and finding its way towards the high growth companies that the VCT scheme is intended to benefit.

Rules to restrict upfront relief in a share buyback situation were first mooted in the Consultation Paper earlier this summer. We now have some draft legislation, so it is now possible to explore in more detail, just how these new rules will apply.

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Venture Capital Trusts Part Two – Who are the investors?

 Investment Tax, Venture Capital Schemes  Comments Off on Venture Capital Trusts Part Two – Who are the investors?
Nov 062013
 

This is the second in a series of articles on venture capital trusts. In Part One we looked at the tax breaks on offer for those brave enough to risk their capital. In this article we shall take a closer look at the investors – who they are, how they can invest, and what are the strings attached to the investment.

(This article can be downloaded in pdf format in portrait or landscape version at Academia.edu.)

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Jul 162013
 

This is the first in a series of articles on venture capital trusts, an investment vehicle designed for those who want to invest in growth stocks but who want the comfort of having a professional manager doing the hard work for them. (This article can also be downloaded in pdf format at Academia.edu.)

We shall start off by looking at the tax breaks on offer. But first…

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Jul 122013
 

Please note, this table and the commentary are out of date. A more up to date version which takes into account the new Social Enterprise Investment Scheme can be found here

There are three types of Venture Capital Scheme, each one with tax breaks to induce investors to part with their hard earned money. The following table is a summary of these tax breaks, together with the relevant statutory provision. Continue reading »