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Capital gains tax exemption on the disposal of ordinary shares in a VCT.Įxample effect of initial income tax relief.Tax-free dividends, which may include capital distributions.Relief is limited to the amount which reduces the investor’s income tax liability to nil and is only available on shares issued through an offer it is not available on shares purchased through the London Stock Exchange.

Income tax relief of 30% of the sum invested, subject to a maximum investment of £200,000 in any tax year.

The tax reliefs are available to investors over the age of 18 who pay UK income tax they are dependent on the individual circumstances of the investor. You should carefully review the ‘Risks of investing in VCTs’ section below for more details on this and on the risks of investing in VCTs.īelow is a summary of the tax benefits, which are based on current tax legislation and are subject to change at any time. The VCT shares themselves are quoted on the London Stock Exchange Main Market and can therefore be bought and sold at any time, although an investor will lose some or all of their tax reliefs if they sell their shares before the fifth anniversary of their issue. The income tax relief is only available on new shares issued by the VCT, whilst the dividend tax relief and the capital gains tax relief is available on new VCT shares and existing VCT shares bought through the London Stock Exchange.

To encourage investment into VCT schemes, the government has put in place a number of incentives in the form of income tax relief, dividend tax relief and capital gains tax relief. Most of the companies are registered in the UK.īy virtue of the size of the qualifying companies, investments in them (known as qualifying investments) carry greater risk than those made in larger companies, although they also have the potential to deliver significant capital growth over the medium to long term. For example, in most cases they must have less than 250 employees and gross assets of less than £15m. There are complex rules with which a VCT must comply that are designed to channel investments into small companies with certain characteristics, known as qualifying companies. Investors subscribe for shares in the VCT and this money, after fees have been deducted, is pooled and used by the investment manager of the VCT to invest in or lend money to small unquoted companies, including companies that are listed on AIM or the AQSE Growth Market.

A Venture Capital Trust (otherwise known as a VCT) is an investment company, broadly similar to an investment trust, which has been approved by HMRC.