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Tax Advantages of VCTs

What Tax Relief do VCTs Offer?


  • 30% income tax relief on the amount you invest up to £200,000 per tax year
  • Exemption from income tax on dividends paid by the VCT
  • Exemption from capital gains tax (CGT) on disposal of VCT shares

 

Under current legislation, the Government offers 30% Income Tax relief on VCTs, limited to total VCT investments of £200,000 per person per tax year. For example, if you invested £10,000, you would receive £3,000 back in Income Tax relief – either as a lump sum rebate or through your salary in the form of a tax code amendment. It is in the Government's interests to support UK smaller businesses which could become the big businesses of the future, and offers tax incentives to encourage investment in them.


Initial Income Tax relief is limited to the amount which reduces the investor's income tax to nil – so if you have only paid £5,000 in Income Tax, you would only be eligible for a £5,000 rebate – and is only available for VCT shares in the year of subscription. If the investment is not held for five years, or the VCT does not invest at least 70% of the funds raised in qualifying investments within three years, the investor's initial tax relief will be withdrawn and you will have to repay it. Dividends paid by VCTs are not liable to any tax. To be eligible for Income Tax relief, you must buy shares in a VCT upon its launch, not once it has already been established.


When you eventually sell your VCT, any gain you make will be exempt from Capital Gains Tax. You will be eligible for Capital Gains Tax relief even if you buy into a VCT once it is quoted on the stock market.


Most VCTs will have a provisional tax clearance, because they have three years to meet the qualifying provisions, for example, investing a minimum of 70% in qualifying securities. While no VCT has yet failed to meet the requirements during that time, the Inland Revenue grants provisional relief subject to the conditions actually being met.


Levels and bases of, and relief from taxation are subject to change. To invest in any of the Venture Capital Trusts below, just click on the links in the table and fill in your details to save up to 3.00% on standard inital charges and receive a complete application pack email.

 

Generalist VCTS

These VCTs typically invest in unquoted companies in the hope of making a profit when the company is sold or floated.

Compare Generalist VCT Offers
 Minimum InvestmentAmount RaisingAmount Raised†Initial Charge*More Info
£5,000£20m£0m5.50% 4.50%More Info >

†As at 05/11/2014

*If you invest via Fair Investment Company if indicated a discount off the standard initial charge is available.

 

The value of investments and any return from them can fall as well as rise and you may not get back the full amount invested. Please ensure that you read the Important Risk Information below

AIM VCTs

AIM VCTs are similar to traditional investment or unit trust/OEIC funds where the manager selects companies in which to buy and sell shares. The main difference however is that the fund manager can only invest in new shares of companies listed in AIM or are about to list.

Compare AIM VCT Offers
 Minimum InvestmentAmount RaisingAmount Raised†Initial Charge*More Info
£3,000£7m£3m5.00% 2.00%More Info >
£5,000£20m£10m5.50% 4.00%More Info >

†As at 05/11/2014

*If you invest via Fair Investment Company if indicated a discount off the standard initial charge is available.

 

The value of investments and any return from them can fall as well as rise and you may not get back the full amount invested. Please ensure that you read the Important Risk Information below

Limited Life VCTs

These VCTs have a set shelf life and are designed to "wind up" after a set term providing an exit for investors.

Compare Limited Life VCT Offers
 Minimum InvestmentAmount RaisingAmount Raised†Initial Charge*More Info
£5,000£30m£0m3.00%More Info >
£5,000£25m£13.5m5.50% 4.50%More Info >

†As at 05/11/2014

*If you invest via Fair Investment Company if indicated a discount off the standard initial charge is available..

 

The value of investments and any return from them can fall as well as rise and you may not get back the full amount invested. Please ensure that you read the Important Risk Information below

 Important Risk Information:

This website contains information only and does not constitute advice or a personal recommendation in any way whatsoever. The value of investments and income from them can fall as well as rise and you may not get back the full amount invested. The tax efficiency of VCTs is based on current tax law and there is no guarantee that tax rules will stay the same in the future.

Different types of investment carry different levels of risk and may not be suitable for all investors. Please ensure that you read the Important Risk Information for further details. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment and should read the product literature. If you are in any doubt as to the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.