View more on these topics

£5M limit applies to all VCT fund-raising

Baker Tilly has warned that all funds raised by venture capital trusts will be subject to the new £5m annual investment limit, which caps the amount that VCTs can invest in qualifying companies.

In last year’s Budget, Chancellor George Osborne announced the Government would raise the annual investment limit for VCTs in qualifying companies from £2m to £10m from April 6, 2012. The £10m limit was due to apply to funds raised from April 6, 2012.

Any funds raised between April 5, 2007 and April 5, 2012 would still have been subject to the £2m investment limit. Funds raised before April 5, 2007 were protected from the cap.

In last week’s Budget, Osborne reduced the £10m limit to £5m.

HMRC says the limit will apply to all funds raised by VCTs, including any money raised before April 5, 2007.

An HMRC spokeswoman says: “The limit has been reduced to £5m. VCT monies raised prior to 2007 have not been subject to this annual limit up until now but they now will be.”

Baker Tilly head of capital markets Chilton Taylor says: “This move is so important because under the previous rules, when VCTs have sold investments made prior to 2007, the proceeds can be re-invested. That allowed a continuous flow of protected money in the VCT market.

“The £5m limit is going to hit all VCTs seeking a large fundraising. Under the new rules, companies will have to be involved in a number of smaller fundraisings.”

Hargreaves Lansdown investment manager Ben Yearsley says: “I think what is key here is you can invest £5m from a VCT into a company and this is a workable amount. VCTs can invest in more than one company.”

Recommended

Stamp of disapproval

Government measures to combat stamp duty avoidance when expensive properties are bought through a company could hit the buy-to-let and institutional investment sectors. Last week, Chancellor George Osborne announced a 15 per cent stamp duty on homes worth more than £2m that are purchased through a company. The aim is to close the loophole that […]

Parkwalk sees merit in spin-outs

Venture capital and enterprise investment scheme specialist Parkwalk Advisors has established an EIS fund which invests in technological innovation and intellectual property through university spin-out companies.

Finance Bill confirms Budget changes

Legislation to bring in the tax measures set out in last week and last year’s Budgets has been published by the Government. The bill’s explanatory notes set out the cut in the top rate of tax to 45p from April 2013, reducing the level at which individuals start paying the 40p tax rate to from […]

4

Why the protection sellers code will fail

A ‘protection sellers code’ is a great idea. It should, in theory at least, ensure that however a protection product is sold, an agreed set of basic fundamentals are adhered to by the seller. This would improve outcomes for those trying to protect their families and their finances. It would give those of us who care […]

How to use wills to protect your clients’ wishes

March was Free Wills Month! Free Wills Month brings together a group of well-respected charities to offer members of the public aged 55 and over the opportunity to have their simple wills written or updated free of charge by using participating solicitors in selected locations around England and Wales. Research by the Law Society* highlighted that only 64 […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment