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Venture Capital Trusts

Venture Capital Trusts (VCTs) offer income tax relief of 30 per cent when invested at subscription, subject to a maximum investment of £200,000, while minimums are usually around £3,000 - £5,000.

How does it work?

An investor who deposits £10,000 into a Venture Capital Trust new issue could stand to receive a cheque from the taxman for £3,000 or a favourable adjustment in their tax code.

This relief is offset against the total income tax bill in any one fiscal year, so even basic rate taxpayers can potentially benefit from relief at 30 per cent providing that the cash returned by the HM Revenue and Customs does not exceed their total income tax bill for the year.

Relief applies as long as the shares are held for at least five years in qualifying companies, although we would recommend investors commit for much longer periods. If the VCT shares are sold within five years the income tax relief will be withdrawn.

What are the risks?

  • Investments and income arising from them can fall in value and you may lose some or all of the amount you have invested.
  • There is no guarantee that the market price of VCT shares will fully reflect their underlying net asset value. Liquidity in VCT shares is also limited.
  • Tax treatment depends on the specific circumstances of each individual and may be subject to change in the future.

Info Point

Whilst VCTs are not used widely in our Discretionary management services, they can be incorporated into the Advisory and Discretionary bespoke services. For further details please contact the Investment Management team on 0113 200 6460.

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