UK and International Tax news

HMRC Updates Venture Capital Schemes Manual With Finance Act 2018 Changes

Monday 29th October 2018

HMRC has recently issued updates to its Venture Capital Schemes Manual with Finance Act 2018 changes, including the Risk to Capital condition, Relevant Investments, Knowledge Intensive Companies and Procedural changes to Venture Capital Schemes.

Investments made on or after 15 March 2018 under the EIS, SEIS and VCTs must meet the risk-to-capital condition. The company will have to demonstrate that it has objectives to grow and develop its trade in the long term and the investment must carry a significant risk.

All risk finance investments are counted towards the lifetime funding limit for companies receiving investment under the tax advantaged venture capital schemes. For the EIS and VCTs, the limit is £12m for most companies and £20m for knowledge intensive companies.

From 6 April 2018, knowledge intensive companies (KICs) will be able to raise £20m of investment in the lifetime of the company or group provided the company meets the definition of a KIC. The maximum amount an individual investor can invest each year in EIS companies is £2m per year, provided any investments over £1 million are in one or more KICs.

There are also changes to the advance assurance service provided by HMRC which has changed the name of the specialist operational team that administers the venture capital schemes to the Venture Capital Reliefs Team. This is part of a wider reorganisation of operational teams dealing with tax reliefs for SMEs.

If you would like further information on the above, please contact Keith Rushen on 0207 486 2378.

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