Claiming tax relief on VCT investment

misterthrifty · 19 November 2018 at 3:25PM

Hi
I purchased some shares in a VCT in the 2017-18 tax year, they were new shares in an existing fund, and I understand that I can claim 30% of the value invested as income tax relief to set against my tax bill.
Can I just put the information on my tax form or do I need another form to complete? Does the relief apply to any tax I pay, PAYE, self-employed earnings, savings & investments?
I think that I will have more tax relief than tax liability, am I able to carry the balance over at all?

Any help is much appreciated.

Berkshire_Beancounter · 19 November 2018 at 5:16PM

You need to complete form SA101 - Additional Information.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/690276/sa101-2018.pdf

On page Ai 2 there is a section for 'other tax reliefs' and box 1 is for the amount of VCT subscriptions. You also need to put details of the investment in box 21 on page 4 of that form.

The HMRC internal manual on VCTs says:

Relief is given in terms of tax for the year of assessment in which the shares were issued by the VCT. The relief due is the smaller of:

1.an amount equal to tax at 30 percent (from 6 April 2006 onwards) on the amounts subscribed within the ‘permitted maximum’ (£200k), and

2. the amount which reduces the individual’s income tax liability to nil.

So I read this as not being able to carry forward any 'excess' tax relief. You can carry back some EIS and SEIS investments as though they were made in the previous year but I can't see anything that says you can do that for VCT investments.

And as far as I know, it applies to relief against income tax from any source - PAYE, self employment and tax due on savings / dividends.

londoninvestor · 19 November 2018 at 8:38PM

Berkshire_Beancounter wrote: »

You need to complete form SA101 - Additional Information.

Just to mention, you can do this as a "section" of your online tax return - it doesn't necessarily have to be a literal separate form.

Berkshire_Beancounter wrote: »

So I read this as not being able to carry forward any 'excess' tax relief. You can carry back some EIS and SEIS investments as though they were made in the previous year but I can't see anything that says you can do that for VCT investments.

And as far as I know, it applies to relief against income tax from any source - PAYE, self employment and tax due on savings / dividends.

That's right.

misterthrifty, sorry this is not much good in hindsight - but generally if you want to invest more in a VCT than you can claim income tax relief on, it's better to buy the "excess" shares (which take you above the tax relief amount) on the secondary market, rather than as newly issued shares.

New shares are priced at NAV plus a few percent in fees, whereas secondary market shares generally trade at a discount to NAV. Usually at least 5% discount, and 10% or 15% isn't uncommon.

Sibbers123 · 20 November 2018 at 11:47AM

You need a tax certificate to make a legitimate claim - ask the VCT provider to send you one.

With VCT's you have to use the tax relief in the year of investment (EIS/SEIS are slightly more flexible).

londoninvestor · 20 November 2018 at 7:01PM

Sibbers123 wrote: »

You need a tax certificate to make a legitimate claim - ask the VCT provider to send you one.

Agreed - it usually comes with the share certificate. Literally in the same envelope in my experience!

I've never had to actually show it to HMRC, but presumably I would if they decided to scrutinise my return further.

Claiming tax relief on VCT investment

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