What Are VCTs?

Find out about VCTs...

VCTs are quoted limited companies whose purpose is to invest shareholders’ funds in smaller unquoted trading companies (including AIM listed stocks) – with potential for growth and to eventually be floated on the stock market, sold, or refinanced – with a view to making a profit in a tax-efficient way.

 

VCTs are run by investment managers, and raise their funds from private investors. Money raised from individual investors is pooled in order to acquire a portfolio of different investments and to spread the risk. The VCT shares are quoted on the London Stock Exchange.

 

Managers must invest at least 70% of new proceeds within three years, and there are several rules surrounding the companies which VCTs are allowed to invest in, in order to protect its investors. To ensure that the VCTs are only investing in genuinely small enterprises, at the time of the VCT issue, the gross assets of the company must be less than £15million. The company must have no more than 250 full-time employees and the company’s shares should not be listed on a recognised stock exchange and certain trades are specifically excluded, such as hotels, nursing homes and banking.


VCTs offer a number of tax benefits, including 30% Income Tax relief on new subscriptions if the shares are held for at least five years.

 

However, there are also a number of important disadvantages, namely, costs are relatively high, VCT shares are illiquid and almost invariably trade at a wide discount to the underlying Net Asset Value, and investment risks are usually high.

 

In our view, VCTs should only be considered by experienced investors who are in a financial position to take a longer term view and tolerate a higher level of risk.

 

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.