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Venture Capital Trusts (VCT's)

An investment vehicle to gain exposure to small, high risk companies

Venture Capital Trusts are collective investments managed by a fund manager. They invest in small, high risk companies whose stocks and shares are not listed on any recognised stock exchange.

How do you invest

Venture Capital Trusts (VCT's) are normally funds which form part of the portfolio of funds of a larger investment company. As an investor you will be able to buy shares in the VCT through the fund manager. Before making the investment ensure you establish whether the VCT is a qualifying fund for tax reliefs. The fund manager will use your investment to invest in small companies. The manager will, once he feels it is appropriate, divest investments with the aim to realise a profit and make new investments. Through profitable divestments your shares will grow in value.

Tax reliefs available

The government would like to encourage such investments as they value the contribution made to the economy by small companies. To that end they do give generous tax reliefs both on income tax and capital gains tax.

It is worth pointing out you can only qualify for these tax reliefs as an individual investor. They do not extent to trustees or companies making such investments.

Such reliefs include,

  • Income tax

    Income tax on VCT's ordinary shares dividends is exempt - you pay no income tax on dividend income you may, or may not, enjoy from your VCT ordinary shares investment.

  • Capital gains tax

    When disposing of your VCT shares you may not have to pay any capital gains tax on any gain you may have enjoyed.

The tax relief rules are quite complex for VCT investments and therefore very important you take financial advice before making such investments.

We have a thorough understanding of VCT's investments here at All Counties Financial Ltd. We are happy to bear the cost of your initial consultation giving you the chance to ask us questions on these high risk investments.

Call 0800 634 4846 to arrange your initial consultation