Higher Risk VCT EIS Investment Review

Higher Risk VCT EIS Investment Review.

HMRC has confirmed that it is to consult with the financial services and public over the effectiveness of tax privileged Venture Capital Trusts and Enterprise Investment Schemes.

What is a VCT?
Lump sum investment scheme that invests in qualifying shares in listed companies that are development/growing i.e. ventures with income tax relief on initial investment up 30% on investments up to £200,000 per tax year and being free of capital gains tax.

What is an EIS?
Lump sum investment scheme that invests in smaller, unlisted companies with income tax relief on initial investment up 30% on investments up to £1,000,000 per tax year and being Inheritance Tax free with “business property relief” after 2 years.

Comment
Both EIS and VCT have not been as successful as you would expect. Tax relief and inheritance tax or capital gains tax benefits. The issues for us are that many venture investments actually fail or lose value as businesses do not grow as would be expected.