Venture capital scheme shares

Produced by Tolley

The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Venture capital scheme shares
  • Enterprise investment scheme
  • Tax-free capital gains
  • Allowable capital loss
  • Capital gains tax deferral relief
  • Seed enterprise investment scheme
  • Tax-free capital gains
  • Allowable capital loss
  • Capital gains tax reinvestment relief
  • Venture capital trusts
  • More...

Venture capital scheme shares

Venture capital schemes are tax efficient investments sanctioned by the Government in order to encourage investment in UK enterprises. They comprise the following schemes:

  1. enterprise investment scheme (EIS)

  2. seed enterprise investment scheme (SEIS)

  3. venture capital trusts (VCT)

  4. social investment relief (SI relief, also known as social investment tax relief (SITR))

The tax reliefs are similar but not identical. Some investors consider VCTs to be more attractive as the risks are spread by indirectly investing in a number of unquoted companies rather than investing direct in one company, as with EIS and SEIS investments.

This guidance note considers the capital gains tax position of individuals disposing of shares acquired through the schemes listed above.

Enterprise investment scheme

EIS is the name of a scheme which encourages individuals to invest money in shares issued by qualifying unquoted trading companies with a permanent establishment in the UK.

A subscription for eligible shares in a qualifying EIS company is a tax efficient investment for the individual. The individual can benefit from the following tax reliefs:

  1. income tax relief of 30% on the amount invested

  2. any capital loss on the EIS shares is an allowable loss for capital gains tax (CGT) but gains are exempt (if certain conditions are met)

  3. the investment can be used to defer the gain on the sale of any asset

These reliefs are considered in further detail in the Enterprise investment scheme tax relief and Enterprise investment scheme deferral relief guidance notes. The conditions for a valid investment are discussed in the

Popular documents