Why invest in Venture Capital Trusts (VCTs)?
VCTs provide investors with the opportunity to invest in potential high growth/high risk small companies. As these types of investment are high risk and speculative they are only suitable for investors who can afford to tie up money for the medium to long term and can afford loss of capital if that happens.
VCTs are highly tax efficient with upfront income tax relief given at 30% and with no tax to pay on any future dividends or capital gains as long as you hold the investment for 5 years.
With bank lending remaining sluggish many small companies are turning to Venture Capital Trusts for funding and expertise which is providing VCT managers with a wider range of investment opportunities they can invest in. Typically most VCT offers tend to come in at the end of the financial year in February and March. With the increased funding opportunities many VCT providers are coming to the market seeking investment from private investors.
Example of VCT Tax Benefits:
If you are a tax payer you can receive a tax rebate of 30% on money invested into a new issue of shares in a VCT or a top up. So if you invested £20,000 into a VCT you would receive a rebate of £6,000 from the taxman as long as you have paid £6,000 in income tax for the tax year. so the effective net cost of your investment is £14,000. The VCT shares need to be kept for 5 years to ensure you keep the rebate. If the VCT pays dividends you will not have to pay tax on these income payments. In addition when it comes to disposing the shares any gain will be exempt from capital gains tax.
Please note all tax treatments are subject to change and depend on your individual circumstances and may be subject to change in future.
The VCTs shown on the tables are a selection of current offers available through our non advised broker service.