Venture Capital Trusts currently offer 30% income tax relief, but this rate will decrease to 20% starting April 6th. Wealth Club urges the government to reconsider this reduction, warning it could create approximately £550 million in lost funding for UK start-ups. The policy change threatens early-stage investments critical for innovation and economic growth. Investors have a limited four-week window to maximize returns by utilizing the higher relief rate. The maximum tax saving will drop from £60,000 to £40,000 on a £200,000 investment, while dividends remain tax-free. This cliff-edge change could significantly impact the UK start-up landscape and future funding opportunities for entrepreneurs.
"Time is running out for investors to benefit from tax incentives designed to help the flow of funding into UK start-ups. In four weeks, the income tax relief for investing in Venture Capital Trusts will reduce from 30% to 20%. Many investors will not be aware of this cliff edge and what a difference it could make to their money."
"Right now, the tax break is worth up to £60,000 if you use the full £200,000 VCT allowance - and the dividends are tax-free. From the new tax year, the maximum saving falls to £40,000 on the same investment. Investors shouldn't leave it too late."
"The UK sorely needs to harness the innovations in start-up and scale up companies, to help boost growth, especially given the uncertainty facing the global economy right now. But the changes risk reducing vital funding flows for entrepreneurs."
Read at London Business News | Londonlovesbusiness.com
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