Venture Capital Trusts

What is a VCT?

VCTs are listed companies which pool investor’s money to fund a series of small businesses with high potential for growth. The government introduced them in 1995 as an easy way for investors to access these small companies, and encourage investment in UK entrepreneurs.

There are rules which govern the different types of VCT schemes, and there are risks – which is why the government offers generous tax incentives to compensate investors for the risk they take on.

How do I benefit from a VCT investment?

To encourage people to invest in these early-stage UK companies, the government offers the following tax benefits to investors:
• 30% Income tax relief on the first £200,000 invested in a newly issued VCT each year
• No income tax on any dividends from VCT shares
• No capital gains tax (CGT) when you sell your VCT shares

So, if you invest £10,000 in a new VCT, you could receive £3,000 tax relief (as long as you owe or have paid sufficient tax in that tax