{"id":1019,"date":"2019-07-26T13:50:57","date_gmt":"2019-07-26T12:50:57","guid":{"rendered":"https:\/\/taxfix.com\/en-uk\/?p=1019"},"modified":"2023-01-09T17:16:34","modified_gmt":"2023-01-09T17:16:34","slug":"what-is-vct-venture-capital-trust","status":"publish","type":"post","link":"https:\/\/taxfix.com\/en-uk\/investor-capital-gains-tax-returns\/what-is-vct-venture-capital-trust\/","title":{"rendered":"What are the VCT (Venture Capital Trust) tax reliefs?"},"content":{"rendered":"\n<p>To encourage VCT investing, the government offers extremely generous tax reliefs to investors as an incentive.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">First of all, what is a Venture Capital Trust?&nbsp;<\/h2>\n\n\n\n<p>Venture Capital Trusts (VCT) are specialised funds designed to invest in new, small but innovative companies that will benefit from their financial support.<\/p>\n\n\n\n<p>In order to be classified as a VCT, a fund must meet the following criteria:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>VCTs are listed on the London Stock Exchange<\/li><li>Companies under the VCT must have no more than 250 employees<\/li><li>Before the investment, companies under the VCT must have no more than \u00a315 million in gross assets<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">So, what are the tax reliefs?<\/h2>\n\n\n\n<p>The tax reliefs are split into two categories: when you begin VCT investing and when you exit your VCT investment.<\/p>\n\n\n\n<p>When you invest in a VCT, you are entitled to:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>A cool 30% income tax relief &#8211; not bad, eh?<\/li><li>Income tax relief against a loan to a social enterprise<\/li><li>Tax-free <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/dividends\/\">dividends<\/a> (if earned from VCTs)<\/li><\/ul>\n\n\n\n<p>\ud83d\udea8 Hold up! There\u2019s one condition. You need to hold the VCT shares for a minimum of 5 years. Otherwise, you\u2019ll have to pay the income tax relief back to HMRC. \ud83d\udea8<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"embed-container\"><iframe loading=\"lazy\" title=\"Tax in 10(ish) seconds - what is tax-efficiency?\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/93RKUoFKaXM?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<\/div><\/figure>\n\n\n\n<p>When you exit a VCT investment, there are still tax reliefs to take advantage of:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Gains from selling your VCT shares are 100% exempt from <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/capital-gains-tax-cgt\/\">Capital Gains Tax<\/a><\/li><\/ul>\n\n\n\n<p>This applies for both newly issued shares and shares bought on the secondary market and there is no minimum on how long you have to hold the shares.&nbsp;<\/p>\n\n\n\n<p>You are allowed to claim these reliefs up to 4 years after the end of tax year of assessment in which you made the VCT investment.<\/p>\n\n\n\n<p>Bear in mind; unlike <a href=\"https:\/\/taxfix.com\/en-uk\/what-is-eis\/\">EIS<\/a>, <a href=\"https:\/\/taxfix.com\/en-uk\/what-is-seis\/\">SEIS<\/a>, and <a href=\"https:\/\/taxfix.com\/en-uk\/sitr-social-investment-tax-relief\/\">SITR<\/a> investments, VCTs are not eligible for Inheritance Tax Relief. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How do I invest in VCT funds?<\/h2>\n\n\n\n<p>Whilst VCTs can potentially give investors a high return, this comes with higher risk. Nonetheless, there may be a place for VCTs in your portfolio of tax-efficient investments.<\/p>\n\n\n\n<p>Investing is never without capital risk so we will always recommend seeking advice from a professional before jumping into anything. You should never invest only because of the tax reliefs.<\/p>\n\n\n\n<p>However, if you\u2019ve done your research and you\u2019re 100% certain that investing in small companies through VCTs is for you, you can find VCT funds through platforms such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><a href=\"https:\/\/www.wealthclub.co.uk\/venture-capital-trusts\/\">Wealth Club<\/a><\/li><li><a href=\"https:\/\/www.ii.co.uk\/advanced-investing\/vcts\">Interactive Investor<\/a><\/li><li><a href=\"https:\/\/www.hl.co.uk\/investment-services\/venture-capital-trusts\">Hargreaves Lansdown<\/a><\/li><\/ul>\n\n\n\n<p>The maximum amount you can invest is \u00a3200,000.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Is there another investment scheme?<\/h2>\n\n\n\n<p>Yes, in fact, there are three more! The <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/enterprise-incentive-scheme-eis\/\">Enterprise Investment Scheme<\/a> (EIS) and the <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/seed-enterprise-incentive-scheme-seis\/\">Seed Enterprise Investment Scheme<\/a> (SEIS). These schemes also offer generous tax reliefs.<\/p>\n\n\n\n<p>All four schemes were launched by the government in the early 90\u2019s with intent to help small businesses grow. They are authorised and backed by the financial conduct authority.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Can Taxfix help with VCT reliefs?<\/h2>\n\n\n\n<p>Of course we can!<\/p>\n\n\n\n<p>All you have to do is sign up and we\u2019ll assign you one of our accredited accountants who will be able to file your self assessment tax return for you in as little as 48 hours &#8211; tax reliefs included!<\/p>\n\n\n\n<p>It\u2019s really that simple with Taxfix &#8211; find out more here.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>To encourage VCT investing, the government offers extremely generous tax reliefs to investors as an incentive. First of all, what is a Venture Capital Trust?&nbsp; Venture Capital Trusts (VCT) are specialised funds designed to invest in new, small but innovative companies that will benefit from their financial support. In order to be classified as a [&hellip;]<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[458,462],"tags":[416,418],"class_list":["post-1019","post","type-post","status-publish","format-standard","hentry","category-investor-capital-gains-tax-returns","category-tax-efficiency","tag-benefits-reliefs-grants","tag-invest"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What are the VCT (Venture Capital Trust) tax reliefs? &#8211; Taxfix<\/title>\n<meta name=\"description\" content=\"Venture Capital Trusts (VCTs) are designed for investment in smaller companies. 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