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Venture Capital Trusts (VCTs) explained

Venture Capital Trusts (VCTs) explained

VCTs (Venture Capital Trusts) are a type of Investment Company that invests in small UK businesses. Because the Government wants to encourage investment into these growing businesses, VCTs provide several generous tax benefits. VCTs can potentially give you higher returns but they also come with extra risks, as the companies they invest in can be harder to sell.
VCTs should be regarded as higher risk investments. See more on the risks of investing in VCTs below. With investment, your capital is at risk

What are the benefits of investing in VCTs with Bestinvest?


Market-leading discounts for new and existing investors

Research and ratings

We have researched and monitored every VCT ever launched

Performance data

Ongoing performance tables and Net Asset Value data

The benefits of investing in VCTs

The benefits of investing in VCTs

  • 30% income tax rebate on new investments up to £200,000 per tax year (as long as you have paid the amount of tax being rebated and hold the VCT for at least five years)
  • Tax-free dividends
  • No need to declare dividends with HMRC
  • No capital gains tax

VCT risks

VCTs are higher-risk investments designed for UK resident taxpayers with an investment time horizon of greater than 5 years, which is the minimum holding period to qualify for income tax relief.

Points to consider:

  • Tax reliefs depend on individual circumstances and may change.
  • VCTs may be difficult to sell at a price close to the value of the underlying assets or at the time of your choosing
  • VCTs should only form a small part of your portfolio.
  • You should read the relevant prospectus before making any decisions or click here for more information on VCTs.

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.

Could VCTs help you achieve your investment goals?

Could VCTs help you achieve your investment goals?

Understand more about Venture Capital Trusts including investment rules, tax relief, pros and cons involved and the different types available.

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