Venture Capital Trusts (VCTs)

Venture Capital Trusts (VCTs) were launched in April 1995 as a way for new and unquoted companies to obtain money from investors. VCTs are essentially investment trusts . Like other investment trusts their shares are traded in the stock market.

Since these small and growing companies are a higher risk than investing in bigger, more mature businesses, VCT's offer more attractive tax breaks.

Investors used to receive upfront income tax relief of 40%. However, this was reduced to 30% in the March 2006 Budget.

Any dividends or capital gains however are free of tax.

Capital Gains Deferral Relief is no longer available for new VCT investments. The annual investment limit for VCTs was doubled to £200,000 in Budget 2004.

Last Updated: June 2006 © Moneyextra.com

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