Venture Capital Trusts (VCTs) are an opportunity for investors to support the growth of small UK businesses while receiving attractive tax reliefs in return. They were introduced by the UK Government in 1995 to encourage individuals to invest in this crucial area of the economy. In the 2013/14 tax year alone, over £435 million was raised by VCTs.
By investing in a VCT, the tax reliefs you can benefit from include:
- 30% income tax relief – this is on investments up to £200,000 per tax year and shares have to be held for at least 5 years.
- Tax-free dividends
- Tax-free capital gains
VCT tax reliefs only apply to people aged 18 years or over who are UK income tax payers, and are only available if the trust maintains VCT status. The relief you get depends on your individual circumstances and the tax rules may change in future. HM Revenue & Customs law and practice can change over time and investors who are unsure about their tax status should get independent advice from a professional adviser.
For information on how to claim income tax relief on VCTs, please read our guide.