VCM68150 - VCT: deferral relief: how is the relief given?

TCGA92/SCH5C/PARA2

The relief is given by deferring the date on which the chargeable gain is treated as accruing. There is no requirement that the proceeds of the disposal are actually invested in the subscription for the new shares. The gain is matched against the expenditure on a pound for pound basis. The relief has to be claimed.

Example

In the tax year 1996-97 an investor has the following transactions:

• May 1996 disposes of a property incurring an agreed chargeable gain of £84,000.
• September 1996 subscribes for and is issued £60,000 worth of shares in a VCT. The investor receives ‘front-end' Income Tax relief on the investment.

The investor can make a claim for up to £60,000 of the £84,000 gain to be deferred.

VCT deferral relief is abolished for shares issued after 5 April 2004.