(1)No liability to income tax arises in respect of a venture capital trust dividend if—
(a)conditions A and B are met, and
(b)where the dividend is paid in respect of shares acquired after 8th March 1999, condition C is met.
(2)In subsection (1) a “venture capital trust dividend” means a dividend paid in respect of ordinary shares in a company which—
(a)is a venture capital trust—
(i)at the end of the accounting period in which the profits or gains in respect of which it is paid arose or accrued, and
(ii)when the dividend is paid, and
(b)was such a trust when the person to whom it is paid acquired the shares.
(3)Condition A is that the person beneficially entitled to the dividend—
(a)is an individual of at least 18 years, and
(b)is beneficially entitled to it as the holder of the shares or as the person for whom, or for whose benefit, they are held by a nominee.
(4)Condition B is that—
(a)in the tax year in which the shares were acquired the market value of all the shares acquired by the individual or any nominee of the individual in companies which were venture capital trusts at the time of acquisition did not exceed £200,000, or
(b)in that year that market value exceeded £200,000, but the shares are treated under section 710 as having been acquired within that limit.
(5)For the purposes of subsection (4), the market value of a share is determined as at the time of its acquisition.
(6)Condition C is that the shares were acquired for genuine commercial reasons and not as part of a scheme or arrangement the main purpose of which, or one of the main purposes of which, was the avoidance of tax.
(7)Shares that were not so acquired are ignored for the purposes of subsection (4) and section 710 (whether or not they were acquired after 8th March 1999).
(8)In this section and in sections 710 and 711—
“market value” has the same meaning as in TCGA 1992 (see sections 272 and 273),
“nominee”, in relation to an individual, includes the trustees of a bare trust of which the individual is the only beneficiary, and
“” means shares forming part of the company's ordinary share capital.
(1)This section sets out the rules for determining which shares whose market value is relevant for the limit in section 709(4) are treated as shares acquired within that limit (“”) where that limit is exceeded in a tax year.
(2)Shares are treated as exempt shares so far as their acquisition does not cause the limit to be exceeded at the time they are acquired.
(3)Subsection (2) is subject to subsection (4).
(4)If shares of different descriptions acquired on the same day cause the limit to be exceeded on that day, shares of each description are treated as exempt shares so far as their market value does not exceed the appropriate proportion of the available value.
(5)In subsection (4)—
“the appropriate proportion”, in relation to shares of a particular description, means the proportion which their market value bears to the market value of all the shares acquired on that day, and
“available value” means the maximum value of shares which could be acquired on that day without exceeding the limit.
(1)In determining whether a disposal relates to shares in a company which were acquired when it was a venture capital trust or others, it is assumed that the others are disposed of first.
(2)In determining whether a disposal of shares in a company which were acquired when it was a venture capital trust relates to shares which meet the condition in section 709(4) (annual acquisition limit) or others (“”), assumptions A and B are to be made.
(3)Assumption A is that shares acquired on an earlier day are disposed of before those acquired on a later day.
(4)Assumption B is that where the shares were acquired on the same day, excess shares are disposed of first.
(5)For the purposes of this section, acquisitions and disposals by an individual's nominee are treated as made by the individual, and acquisitions and disposals between them are ignored.
(1)This section applies if shares (“”) are treated under Chapter 2 of Part 4 of TCGA 1992 (reorganisations etc.) as the same assets as other shares (“”).
(2)If all the old shares met—
(a)the condition in section 709(4) (annual acquisition limit), and
(b)if it applied to the old shares, the condition in section 709(6) (acquisition for genuine commercial reasons),
the new shares are treated as doing so.
(3)If only some of the old shares met those conditions, the corresponding proportion of the new shares are treated as meeting them and the remainder are treated as not doing so.
(4)In the tax year in which the new shares are acquired the value of the new shares is ignored in determining whether other shares acquired in the same tax year meet the condition in section 709(4).