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VCTs and EIS banned from investing in renewables

From April next year tax efficient investment vehicles such as VCTs, EIS and SEIS will no longer be able to invest in renewables such as anaerobic digestion and hydroelectric power.

Venture capital trusts (VCTs), enterprise investment schemes (EIS) and seed EIS (SEIS) will no longer be able to invest in renewable energy schemes such as anaerobic digestion and hydroelectric power. In Wednesday's Autumn Statement the government said that all community energy generation undertaken by qualifying organisations will be eligible for social investment tax relief from 6 April 2015, but after this VCT, EIS and SEIS will not be able to invest in them. All other companies benefiting substantially from subsidies for the generation of renewable energy will also be excluded from receiving EIS, SEIS and VCT investment from that date.

VCTs, EIS and SEIS have not been allowed to invest in solar and wind schemes since July because they can no longer benefit from the Renewables Obligation Certificates (Rocs) and the Renewable Heat Incentive (RHI) scheme, and now the Treasury is extending the exclusion to anaerobic digestion, hydroelectric power, and other companies and organisations benefiting from contracts for difference (CFDs). Companies which do not benefit from feed in tariffs, Rocs, RHI, CFDs or foreign equivalents, remain eligible for funding from VCTs, EIS and SEIS.

With regard to VCTs, the change will apply in respect of investments made on or after 6 April 2015 so a VCT must invest in anaerobic digestion or hydroelectric power before the 6 April 2015 for it to be a qualifying investment.

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