An investor who invests, say, £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 If the VCT shares are sold within five years the income tax relief will be withdrawn.

• An investment in a VCT should be considered a long-term investment.
• The value of shares in a VCT and the income from them can fluctuate and investors may not get back the amount they invest.
• 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.