Section 266 — Income Tax Act 2007: Loss of relief if shares disposed of within 5 years

Loss of relief if shares disposed of within 5 years 266 1 This section applies, subject to section 267 (spouses or civil partners), if an individual—

a obtains VCT relief in respect of eligible shares in a VCT, and b makes a disposal of those shares within 5 years of their issue to the individual.

2 In the case of a disposal that is made otherwise than by way of a bargain made at arm's length, any VCT relief obtained by reference to the shares which are disposed of is to be withdrawn.

3 In the case of a disposal that is made by way of a bargain made at arm's length, any VCT relief obtained by reference to the shares disposed of must—

a if it is greater than A, be reduced by A, and b in any other case, be withdrawn.

4 A is 30% of the amount or value of the consideration which the individual receives for the shares.

5 The rules in subsections (6) and (7) are for determining which eligible shares of any class are treated as disposed of for the purposes of—

a this section, and b section 267, if a person disposes of some but not all of the eligible shares of that class which the person holds in a company.

6 Shares acquired on an earlier day are treated as disposed of before shares acquired on a later day.

7 Shares acquired on the same day are treated as disposed of in the following order—

a shares by reference to which VCT relief has not been obtained, and b shares by reference to which VCT relief has been obtained.