Venture Capital Trusts
Help small companies grow, save income tax and receive tax-free dividends
A Venture Capital Trust (VCT) is a publicly listed company run by a fund manager. It aims to make money by investing in small, unquoted, entrepreneurial companies and helping them grow.
When you as a private investor buy shares in a VCT you invest in a basket of small companies. This is riskier than investing in established ones, but can offer significant rewards. Not only might you invest in tomorrow’s Google, but you also receive valuable benefits along the way:
- Up to 30% tax relief – save up to £60,000 on your income tax bill when you invest in newly issued VCT shares
- Tax-free dividends – a record £240 million paid in 2014/2015 alone
- Tax-free growth
- Generous allowance – invest up to £200,000 per tax year
- No need to declare dividends on your tax return
- Discount on VCT initial charge when you invest via Wealth Club
VCTs are currently the only investments that offer tax breaks both when you put the money in and when you receive an income.
Indeed, they are becoming increasingly popular with investors, especially those with a large income tax liability or who are seeking to generate a tax-efficient income.
VCTs raised £542 million in the 2016/2017 tax year – the second-highest level ever recorded. VCTs are not open ended. Offers are limited.
How to invest in VCTs
To invest in a VCT, first download and read carefully the VCT application pack. Then complete the application form and return it to Wealth Club with your cheque payable to the VCT provider. It can take several months to receive your share certificate as the provider may only issue shares once or twice per tax year.