Government clarifies confusion over VCT rules

The Treasury has updated guidance on VCTs in order to ensure the vehicles can allot shares for the 2014-15 tax year.

Legislation introduced following this year's Budget, aimed at preventing VCTs from abusing their tax-efficient status, led to VCTs holding off from issuing shares due to ambigious wording. The rules were intended to prevent VCTs paying out dividends to investors who were buying into a vehicle for a short period of time purely to collect the tax-free dividend. However, wording in the Finance Bill implied trusts paying dividends to shareholders purchasing new shares after 6 April would lose their tax-efficient status. This has now been changed to remove any uncertainties which would ...