What is a Venture Capital Trust (VCT)

The clue is in the name “Venture.”

A VCT is a Government approved vehicle to encourage investment into certain smaller companies’ tax efficiently.

There are different levels of risk. Some are very high and others are less risky yet still carry a level of risk.

The main features:

  • Income Tax Relief of 30% of any investment made. If you were to invest £10,000 the tax man will give you a cheque for £3,000 as long as you have paid that much income tax.
  • Any dividend is tax free
  • Any Growth is tax free
  • They have to be held for 5 years or you lose the tax break.
  • Not necessarily easy to sell at the  end of five years.
  • You may not get back all you paid in.
  • Some VCT’s have an objective of protecting capital value and paying a dividend of 5% per annum (tax free income).

Who are they for?

  • Someone who wants to diversify away from a pension, and would like tax relief
  • Someone who has non pensionable income such as a landlord and would like tax relief
  • Someone who is happy to commit their money for 5 Years
  • Someone who would like a tax free dividend

Get in touch with Hart Greaves if you would like financial advice >>

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