Following talks with the Association of Investment Companies, the government has amended the Finance Bill to remove the uncertainty that caused some VCTs to delay allotting shares in the 2014 to 2015 tax year.
Guidance issued following the Budget was interpreted by some as meaning VCT paying dividends to shareholders who joined after 6 April would cause the trust to lose it’s tax-efficient status.
The legislation was supposed to prevent VCTs from using new, uninvested money to pay dividends to investors from 6 April.
The amendment to the rules now states shares can be issued without tax efficient status being lost and the government has been given permission to change the effect of the new legislation, where one or more VCTs merge.
Ian Sayers, director general of the Association of Investment Companies, said: “We are delighted the Government has acted so swiftly to address our concerns and provide greater certainty for the VCT industry and their shareholders.”
