VCT industry seeking IHT relief from 2006

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Officials in the venture capital trust industry fear investors could pull out of the market from April 2006 unless the Treasury allows VCTs to become exempt investments under inheritance tax rules.

Chancellor Gordon Brown announced in the April 2004 Budget he would reform tax rules on VCTs by removing the 40% capital gains tax deferral but extend income tax relief from 20% on £100,000 to 40% on the first £200,000 per annum and allow capital gains to be distributed as tax free dividends until April 2006. That has left firms concerned about the attractiveness of VCTs as a tax-efficiency investment from next year, as firms worry investors will withdraw their monies after three years – the minimum period assets must be held in VCTs to make them eligible for tax advantages – unless the ...

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