E3.231 VCT Company Approval—The Nature Of Income Condition

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Commentary

Personal and employment tax

To qualify as a VCT, the company's income must be derived wholly or mainly from shares or securities¹.

In computing the amount of the VCT's income and the amount deriving from shares and securities, the sums to be included in respect of loan relationships are exclusive of interest and other amounts in respect of money borrowed by the VCT².

Income from shares and securities

A security in relation to a company is required to have a degree of permanence.

HMRC will regard a company's income as being derived wholly or mainly from shares or securities where at least 70% of its income is derived from these sources³. HMRC does not consider profits of a revenue nature on financial futures or options transactions to be derived

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