The short version: A Venture Capital Trust (VCT) is an investment fund that puts money into small, early-stage companies. You get tax relief for investing, making it one of the more generous schemes available.
What relief do you get?
30% Income Tax relief on what you invest (up to annual limits). Tax-free dividends from the VCT. No Capital Gains Tax when you sell the shares (as long as you held them for at least five years).
What’s the catch?
VCTs invest in high-risk companies. Many of the underlying businesses fail. The tax relief softens losses but doesn’t eliminate risk. You need to hold shares for at least five years to keep the Income Tax relief.
How do you claim the relief?
The VCT gives you a certificate. You claim through Self Assessment. Make sure you file a return, otherwise you won’t get your tax back.
Thinking about VCT investment? We can explain how the tax side works.
