VCM45010 - VC loss relief: general: introduction

ICTA88/S573 - S574

Where certain conditions are met, allowable losses arising on a disposal of shares in qualifying trading company can be claimed against income for Income Tax or CT purposes. In this manual the relief is referred to as ‘VC loss relief’. To qualify for VC loss relief the shares:

• must be ordinary shares, see VCM45150, and
• must have been subscribed for, not purchased from or gifted by a previous holder, see VCM45200, and
• if issued before 6 April 1998, must not be in a ‘listed’ (before 1 April 1996 ‘quoted’) company, see VCM45350, or
• if issued on or after 6 April 1998, must be in an ‘unquoted company’ (within the meaning of ICTA88/S312), see VCM45600.

Relief is available where the investment was in shares in a trading company, or in the holding company of a trading group, see VCM45550. The relief is intended to provide investors in unlisted trading companies with some degree of financial insurance against failure, and is part of the Government's assistance to small businesses.

Claims can be made by individuals (under ICTA88/S574) or by investment companies (under ICTA88/S573). The relief under ICTA88/S574 does not extend to trustees.