What are Venture Capital Trusts (VCTs)
Venture Capital Trusts (VCTs) provide investors with a diversified portfolio of early stage unquoted companies.
When investing in VCTs, eligible investors will receive tax benefits including 30% ‘up-front’ income tax relief, tax-free dividends and exemption from capital gains tax. However, VCTs are not exempt from IHT and do not attract Loss Relief.
The companies included in VCT portfolios can be private or listed on the AIM. High profile companies that have received backing from VCTs include Zoopla and Gusto.
VCT Tax Benefits
Income Tax Relief
Eligible investors investing in a VCT may receive 30% income tax relief.
If you invest £10,000 in a Venture Capital Trust (VCT) you may receive £3,000 income tax relief, assuming your annual tax liability is £3,000 or more.
|Income Tax Relief|
|30% Income Tax Relief||£6,000|
This table is an example only. Please consult a tax professional before investing.
Capital Gains Tax Exemption
Eligible investors in a VCT will pay no capital gains tax on disposal.
Tax Free Dividends
Unlike EIS and SEIS, any dividends received from VCTs are tax free and do not have to be included on a tax return.
VCT Tax Benefit Comparison
|Maximum Allowance||Income Tax Relief||Tax-Free Dividends||IHT Relief||Loss Relief||CGT Relief or Deferral|
|SEIS||£100,000||50%||No||2 Years||Yes||50% Relief|
*EIS limit raised to £2m if investment is made in knowledge intensive companies
EIS Funds and VCT Comparison Guide
Download our EIS Tax Benefits Summary Guide to refer back to.
This guide provides a brief summary of the main tax benefits associated with EIS. Please visit our resources page for more comprehensive guides.
Please read the High Net Worth Individual Statement or Sophisticated Investor Statement before completing downloading this guide.