What is a Venture Capital Trust?
Venture Capital Trusts (VCTs) were introduced by the Government in 1995 to encourage individuals to invest in UK smaller companies. The Government achieved this by offering VCT investors a series of very attractive tax benefits. More than £3.6 billion has been invested in VCTs between 1995 and 2008.
All VCTs are companies listed on the main market of the London Stock Exchange with independent directors whose objective is to protect the interests of the VCT investors. A VCT will typically raise between £10 million and £50 million from thousands of individual investors.
Why invest in VCTs?
Advantages
- 30% income tax relief on investments up to £200,000
- Tax–free capital gains on sale of shares
- Tax free dividends
Disadvantages
- VCTs due to their nature are regarded as high risk investment
- Minimum five year term to qualify for tax benefits
