Changes to VCT regime
Following publication of the Finance Bill, Her Majesty's Treasury's have further announced their intention to defer changes to the regime for Venture Capital Trusts from April 6th to the date the Bill receives Royal Assent. This will give investors, fund managers and businesses more time to prepare for the changes and will prevent ongoing transactions from being unduly affected.
The BVCA strongly welcomes HMT's constructive approach which chimes with the Government's consistent support for venture finance since its inception. We understand the sensitivity of negotiating state aid approval with the Commission and that recent changes should be seen in this light. Ultimately the change in annual investment limits from £2m to £5m will see a windfall of new investment into the UK's fastest growing companies, creating jobs and fostering innovation. HMT have listened to the concerns of industry and this investment can now continue, unabated.
BVCA Chief Executive Mark Florman said:
"VCTs are an important way to connect private savings with the investment so badly needed by small companies with high growth potential. That the annual limit will be raised to £5m will only improve the situation fostering more innovation and more job creation. We understand the need to work with the Commission on state aid clearance and now that the implementation of the requisite changes has been smoothed, we can look forward to the VCT sector continue to help grow our economy back to prosperity."
Notes to editor
- The Government announced in Budget 2011 that the annual investment limit for individual companies for VCT commitments will be raised - confirmed in this year's Finance Bill as £5m. Accompanying this change, new sanctions for breaching this threshold included possible loss of tax status for the VCT and its entire portfolio. That this change would have come into effect on April 6th threatened existing commitments and contractual obligations. That this has now been deferred to Royal Assent will give fund managers adequate time to plan accordingly, as well as aligning their introduction with likely confirmation of the approval for the new £5m limit.
- Today's announcement can be viewed here: http://www.hm-treasury.gov.uk/finance_bill_2012.htm
- The British Private Equity and Venture Capital Association (BVCA) is the industry body for the UK private equity and venture capital industry. The BVCA has approximately 520 member firms, representing the overwhelming number of UK-based private equity and venture capital firms and their advisers.
