Triple Point VCTs and the Triple Point EIS Service
Recap on 2015
In October 2015 the government announced changes to the excluded activities of the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) so that, with effect from 30 November 2015, the provision of reserve energy generating capacity and the generation of renewable energy benefiting from other government support by community energy organisations would no longer be qualifying activities. The government then made further announcements in the Spending Review and Autumn Statement in November 2015 to exclude all remaining energy generation activities from the schemes from 6 April 2016.
Budget 2016 announcements
As announced in November last year, the government has now confirmed that it will exclude all remaining energy generation activities in respect of new EIS and VCT investments made from 6 April 2016.
The Budget Statement 2016 also revealed that the government will make technical clarifications in respect of the EIS and VCTs to ensure that the legislation introduced in last year’s second Finance Act operate as intended. We await further details of these clarifications. In the meantime, our VCT tax advisers have confirmed that, with effect for investments made on or after 6 April 2016, there will be new conditions applied to non-qualifying investments. The details of these conditions will be included in the draft 2016 Finance Bill which is expected to be published next week.
The announced changes in the rates of CGT from 6 April 2016 mean that an EIS investor that has or intends to defer a capital gain arising before 6 April 2016 could potentially benefit from a large reduction in CGT. A gain that would have been subject to CGT at 28% could, if deferred beyond 6 April 2016, be subject to a CGT rate as low as 10% (depending on individual circumstances), or further deferred into an additional EIS investment.
The announcements abolishing the dividend tax credit and introducing a new dividend allowance do not affect Triple Point VCTs as dividends from qualifying VCTs are already exempt from income tax.
Triple Point Estate Planning Businesses and Services
Today’s announcements do not appear to have a material impact on the provision of our estate planning strategies.
We note that the government intends to abolish Class 2 NICs from April 2018 which may be of small positive benefit to members of the Generations Capital businesses. No announcement was made in respect of the inheritance tax basic nil-rate band which appears to remain frozen at £325,000 until 2018.
Announcements made in respect of the tax treatment of company distributions, reform of the substantial shareholding exemption, and in entrepreneurs’ relief may affect any planning contemplated by those advising shareholders of personal trading companies and of existing companies accessing either Triple Point Lease Partners or Generations Navigator LLP.
If you would like any more information or if you have any questions about any Triple Point products, please get in touch on 020 7201 8990.
The Hunt for Predictable Income - The Case for Direct Lending
A challenging investment environment is driving many UK investors beyond conventional routes in sear...
Putting your eggs in the right basket
Investors naturally seek the best of both worlds: a high, predictable return on their money, combine...
Addressing the critical obstacle for venture capital investing
The formative years in a business’s life and journey are often it’s most fragile and cri...