Venture Capital Trusts (VCTs)
VCTs were established to encourage investment in expanding or developing smaller companies. They are similar to Investment Trusts, although they often charge higher fees.
They are usually large funds (£10m to £30m), which means that they can typically spread their investments over a number of companies - typically up to 50 per trust.
VCTs can offer you significant tax benefits, but you should be aware that:
- Smaller companies tend to have higher failure rates than more established companies
- The value of your investment can reduce to below that which you invest and you could in extreme circumstances lose all that you invest
- VCT schemes are illiquid and there are very restricted ways to realise investments
- Changes in legislation may adversely affect the value of investments
- Strict tax rules govern the investment content of VCTs
- There's no tax relief on VCT shares sold at a loss.
The tax benefits of VCTs
For investments of up to £200,000 in any one tax year, you can receive:
- 30% income tax relief on the amount of new shares you subscribe for in the tax year, provided you continue to hold the shares for at least five years. This relief can be set against your tax liability in the year of investment.
- Tax-free dividends paid by the VCTs on both newly issued shares and second-hand shares purchased.
- Exemption from capital gains tax on VCT shares sold at a profit.
Barclays Wealth can help you understand all the risks and benefits, and if appropriate, incorporate VCTs into your overall investment strategy.
Legal information
The products and services described on this page are provided by the following company, which is part of Barclays Wealth: Barclays Bank PLC in England & Wales. For further information on these companies and Barclays Wealth please read the Important Information. Each Barclays Wealth company reserves the right to make a final determination on whether or not you are eligible for any particular product or service. Tax treatment depends on your individual circumstances and may be subject to change in the future.
You have sole responsibility for the management of your tax and legal affairs including making any applicable filings and payments and complying with any applicable laws and regulations. We have not and will not provide you with tax or legal advice and recommend that you obtain your own independent tax and legal advice tailored to your individual circumstances.
