The Lemon Fool

I have two investments in the same VCT, one made in 2016, one in 2018 originally they were in different VCTs but the VCTs merged after I invested).

The 2016 investment is held as a certificate, but the 2018 shares are held with my broker (HL).

I should be able to sell the 2016 investment in 2021 without losing the tax relief, but it is not clear to me how I ensure that HMRC considers that the sold shares correspond to the 2016 investment, not 2018?

If I lodge the 2016 shares with my broker, the two holdings will be merged before I could sell anything, so I guess that would not work?

Would it be OK if I transferred the 2018 shares to my spouse (or to a different brokerage account), and then lodged the 2016 shares with my broker, and sold them? Or I could open a different broker account to hold and sell the 2016 shares?

Your situation is not unusual: quite a few Fools including myself have been there at one time or another. Lodging the shares all with the same broker is not a problem: HMRC are well aware of the scenario and operate an explicit first-in-first-out rule for sales.

As far as I'm aware H-L have now stopped all (new?) VCT business. All my VCT holdings were previously lodged with them, but my new investment this year is now a certificate in the drawer at home!

Thank you.

It is true that HL are not accepting lodgements for now, but they told me that they would restart soon, when enough staff are back in the office.

What Uncle has said is correct. I wouldn't trust HL to restart accepting certificated forms anytime soon.

I use Jarvis X-O now and it seems to be working out ok.

Doubt you could transfer inside the 5 year period without messing up your tax relief.

flyer61 wrote:Doubt you could transfer inside the 5 year period without messing up your tax relief.

What do you mean by this? Why would transferring mess up the tax relief?

Bgsbgs wrote:What do you mean by this? Why would transferring mess up the tax relief?

No problem transferring to/from broker accounts. Though you wouldn't be able to transfer to a wrapper - like SIPP or ISA (yes, there are reasons you might want to).

The one I'm not sure of - not a question I've ever looked into - is whether transferring to your missus would work.

Digging deep into HMRC tax manual>>>
https://www.gov.uk/hmrc-internal-manual ... l/vcm51090
This one indicates FIrst in first out rule for disposals and also that transfers to spouse retain income tax releif benefit,

Thanks Cprof, that was the bit I was not sure about, transfers to the spouse within the 5 years. Hopefully that clears it up for the OP.

My understanding is that one can transfer a VCT holding to and from certificates and nominees without loss of initial tax relief. One can also transfer VCT holdings to one's spouse without loss of initial tax relief but even if such transfer takes place in the tax year of share issue the initial tax relief can only be claimed by the original shareholder.

I have been in touch with HL for nearly a year about their suspended services and am currently transferring to X-O although that is taking over two months. HL said this week that they hope to restart services later in the financial year but I wouldn't hold your breath.