VCTs or Venture Capital Trusts were introduced by the Government in 1995 to encourage individuals to invest in UK smaller companies. The Government achieved this by offering VCT investors a series of very attractive tax benefits. More than £3.6 billion has been invested in VCTs between 1995 and 2008.
All VCTs are companies listed on the main market of the London Stock Exchange, with independent directors whose objective it is to protect the interests of the VCT investors. A VCT will typically raise between £10 million and £50 million, from thousands of individual investors.
Interested in VCT investments? Contact us with an investment enquiry or call 0800 678 5929
The Tax Advantages of VCTs
Venture Capital Trusts offer a number of tax benefits:
- 30% upfront income tax relief on investments between £3,000 and £200,000, noting:
- relief is not at your marginal rate
- you must hold the shares for five years to retain the relief
- you can only reduce income tax liability to zero in the relevant tax year
- Income tax relief can be used against all forms of income tax paid, not just earned income
- All dividends are tax free
- Capital gains on sale of shares (while structured as a VCT) are tax free
Interested in these attractive tax advantages of VCT investments? Contact us with an investment enquiry or call 0800 678 5929 now.
VCT RULES
There are various VCT qualification criteria:
- VCTs have to invest 70% of the funds they raise in UK ‘qualifying’ companies within three years
- No single holding can be more than 15% of the value of the VCT at the time of the investment
- VCTs cannot invest more than £1 million in any one company in any one tax year
- Investee companies must have gross assets of less than £7 million at the time of investment
- A company in which a VCT invests must have fewer than 50 full-time employees at the time of investment
Ask us about VCTs with an investment enquiry or call 0800 678 5929 now.
