The Chancellor's decision to reduce the qualifying period for the maximum rate of business assets ta...
The Chancellor's decision to reduce the qualifying period for the maximum rate of business assets taper relief could affect the future popularity of venture capital trusts.
Maximum business assets taper relief means capital gains realised from the sale of a business will be taxed at 10% rather than 40%. However, following the changes, maximum relief will now be available after just two years instead of four.
Bill Nixon, manager of the Aberdeen Growth Opportunities VCT believes the Budget announcement will have a huge impact on future venture capital trust (VCT) fund raisings.
The change, he said, will adversely affect the number of people who will need to defer potential capital gains charges of 40%. A 10% liability is much easier to swallow, Nixon said, and the appeal of tax efficient products for people faced with this kind of bill is much less than if they were faced with taxation at 40%.
He said: 'Tax incentives are one of the main drivers and, in particular, an individual's ability to defer their CGT liability to a later date. The changes will mean that in many cases their liability will be lower, consequently their incentive to invest in a VCT and defer payment of the gain is reduced.
'For the VCT market to continue to grow, the Government will need to be lobbied to review the tax incentives for investing in VCTs.'
One way round this might be for the Government to consider raising the income tax relief available on new subscriptions from 20% to 40%, he suggested.
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till