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How to invest in VCTs

In most cases VCT share offers are from existing VCTs seeking additional funding through a ‘top-up’ offer though occasionally an entirely new VCT may launch. These will either be accompanied by important documentation known as a Securities Note (in the case of a top-up offer) or Prospectus (when it is new launch). These documents provide important information regarding the offer, the risks and they also contain the application forms. It is important to read these carefully before investing. Copies of these documents are available to download in PDF format from the ‘current launches’ section of our website.

As each VCT only has limited capacity, we suggest that you check that it remains open before submitting your application.

The process for applying for a VCT through us is an offline one. You should return your completed and signed application to:

VCT applications, Bestinvest, 6 Chesterfield Gardens, London W1J 5BQ

This should either be accompanied by a cheque made payable to the relevant VCT as stated on the application form (not Bestinvest) or alternatively most VCTs now accept payment by electronic bank transfer providing an application form is then posted.

 

What happens after you invest?

Once we have received your application we will process it and send it to the receiving agent of the VCT manager. You will receive written confirmation from us followed by confirmation from the VCT receiving agent. A few weeks later you will be sent both a share certificate and an Income Tax relief certificate. These should be kept in a safe place.

When you complete your tax return for the year in which you invested in a VCT share offer, there will be a section for you to complete disclosing your VCT investments. You will then receive the 30% Income Tax credit either by way of a change in your tax code or as a lump sum from HM Revenue & Customs. If you are self-employed the tax rebate may be paid by a reduction in Schedule D tax.

 

How do you sell a VCT?

It is important to be aware that if you sell your VCT shares within five years of subscribing for a new share issue, you will be liable to pay back the 30% Income Tax credit you have received.

Although VCT shares are listed on the stock market, the secondary market is not active and shares always trade at discounts to their net asset value. The good news is that most VCTs now have buyback schemes in place to limit the level of discount for investors wanting to sell. In many cases this is 10% but an increasing number of VCTs now target a discount of 5%.

If you are looking to sell shares in a VCT, we strongly suggest you do not attempt to do this through an automated online service, including our Online Investment Service, but instead arrange for us to liaise with the market makers to arrange for these shares to be purchased through a VCT share buyback. Call us on 020 7189 9999 if you would like to discuss this.

VCTs should be regarded as higher risk investments.

The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested. Past performance is not an indication of future performance.

VCTs are only suitable for UK resident taxpayers who can tolerate higher risk and have a time horizon of greater than five years. Historical or current yields should not be considered a reliable indicator of future returns, which cannot be guaranteed. Share values and income from them may go down as well as up and you may not get back the amount originally invested. Owing to the nature of their underlying assets, VCTs are highly illiquid. Investors should be aware that they may have difficulty, or be unable to realise their shares at levels close to that that reflect the value of the underlying assets. Tax levels and reliefs may change, and the availability of tax reliefs will depend on individual circumstances. You should only subscribe for new VCT shares on the basis of the relevant prospectus and must carefully consider the risk warnings contained in that prospectus.

We aim to provide investors with information to help them make their own investment decisions although this should not be construed as advice or an investment recommendation. If you are unsure about the suitability of an investment or if you need advice on your specific requirements, we strongly suggest that you consider professional financial advice.

OUR AWARDS

Past performance is not a reliable indicator of future returns

The value of your investment can go down as well as up, and you can get back less than you originally invested.

The Bestinvest Online Investment Service, including any account analysis and investment reports provided by our guidance services, is an online execution-only dealing service for investors who want to make their own investment decisions. It does not provide advice on the suitability of products and investments; if you are unsure about the suitability of any investment you should seek professional advice. Clients of our Investment Advisory Service and Managed Portfolio Service can use the website to obtain current valuations of their investments but cannot trade on these accounts online and should call their adviser if they wish to discuss changes to their investments.

Past performance or any yields quoted should not be considered reliable indicators of future returns. Restricted advice can be provided as part of other services offered by Bestinvest, upon request and on a fee basis. Before investing in funds please check the specific risk factors on the key features document or refer to our risk warning notice as some funds can be high risk or complex; they may also have risks relating to the geographical area, industry sector and/or underlying assets in which they invest. Prevailing tax rates and relief are dependent on your individual circumstances and are subject to change.

Issued by Bestinvest (Brokers) Limited (Reg. No. 2830297), which is authorised and regulated by the Financial Conduct Authority. Financial services are provided by Bestinvest (Brokers) Limited and other companies in the Tilney Bestinvest Group, further details of which are available here. This site is for UK investors only.
© Tilney Bestinvest Group Ltd 2016.

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