Venture Capital Trusts (VCTs) are investment companies listed on the London Stock Exchange and are particularly attractive to tax paying individual investors who invest in new VCT shares and hold them for at least three years.
VCTs generally invest in a portfolio of unquoted companies, as well as AIM quoted companies. Due to the nature of the companies that VCT’s invest in this type of investment can be extremely volatile and is certainly not for everyone, however for the more experienced investor who is prepared to accept the risks involved VCT’s can be an interesting addition to an already well diversified portfolio.
Tax-paying investors receive income tax rebate at 30% on the amount invested, thus reducing the effective net cost of the investment to 70 pence for each £1 invested, provided the shares are held for at least five years and the investor has paid the tax
Dividends paid by a venture capital trust are free of income tax and there is no tax on capital gains made upon disposal of shares in a VCT.
Capital gains made by the venture capital trust on its underlying investments are free of corporation tax and, unlike an ordinary investment trust, these gains may be distributed by way of dividends to investors. Investment in VCTs is limited to £200,000 per person per tax year.
At Four Corners we have access to a wide range of VCT’s all with differing investment strategies, please do not hesitate to contact us if you wish to discuss this form of investment.
