Venture Capital Schemes (VCS)
The measure
The Chancellor announced several measures designed to encourage investment in Venture Capital Schemes.
In all cases the new measures relax the time limits when the company needs to employ the money invested. Further measures for EIS will see the investment conditions relaxed. To date, investors have been restricted to treat 50% of their investment as being made in the previous year (subject to an overall investment limit of £50,000). For 2009/10 onwards, the annual investment limit for income tax relief on EIS subscriptions is £500,000 and it is possible for the full amount to be carried back to the preceding year.
Finance Bill 2009 will also remove an anomaly which has in the past led to an unintended tax charge on certain share for share exchanges in relation to shares issued under VCS.
Who will be affected?
Individuals investing in either the Enterprise Investment Scheme (EIS), Corporate Venturing Scheme (CVS) or the Venture Capital Trust (VCT) Scheme, companies attracting investment in such funds and the funds themselves.
When?
For individuals, the measures apply for 2009/10 onwards.
The new timeframe for companies applies to investments made on or after 22 April 2009.
The removal of various conditions should result in greater flexibility for taxpayers and companies. For individuals, the removal of certain anomalous capital gains tax charges is to be welcomed.
