Government's rise in capital gains tax could prompt VCT resurgence

The expected rise in capital gains tax could attract investors towards venture capital trusts, experts say, because the vehicles are exempt from both capital gains and income tax.

The coalition Government has said it will move to tax non-business capital gains at rates similar or close to those applied to income, which could result in a rise of as much as 50%. Patrick Reeve, managing partner of VCT investor Albion Ventures, says the secondary market for VCT shares could get a boost. “If you can buy shares at a relatively high discount, when it is time to sell them investors will not have to pay capital gains on any narrowing of the discount,” he says. Barry Anysz, a divisional director and VCT specialist at Rensburg Sheppards Investment Management, agrees. ...