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Investment relief is withdrawn in whole or in part if the investor disposes of eligible shares in a VCT within five years of their issue¹. An example is provided in VCM51090.

For shares issued after 5 April 2000 and before 6 April 2006, the period was three years.

If the disposal is not at arm's length, the whole of the relief is withdrawn².

If the disposal is at arm's length, the relief is reduced by 30% of the amount of consideration received for the shares or withdrawn entirely if it is less than 30% of the consideration³. This means that if the sale proceeds exceed the cost of the shares, the whole of the relief is withdrawn.

For shares issued in 2004/05 and 2005/06 the relief was reduced by 40%.

Where the investor does not dispose of the whole of a holding of eligible shares, the shares acquired on an earlier day are treated as disposed of before those acquired on a later day. If shares were