01132399500 website@pjgfs.com

Venture capital trusts (VCTs)

A venture capital trust (VCT) is an investment company that has been approved by HMRC, is quoted on a regulated market and invests at least 70% of its assets in small unquoted companies (those that would qualify under the EIS).


Aside from the type of companies it can invest in and the percentage of its asset portfolio that must be invested, there are other conditions for VCTs:

  • 85% of income must be distributed in the form of dividend
  • it must be able to demonstrate that its investments are spread
  • no one investment can account for more than 15% of the whole portfolio.

Changes to VCT, EIS and SEIS schemes require that investments are required to satisfy the new ‘risk to capital' test at the point of investment.

Income tax relief

If an individual subscribes for new ordinary VCT shares up to the value of £200,000 in a tax year they will qualify for 30% income tax relief.

Any dividend received in respect of ordinary shares in a VCT is exempt from income tax if the individual receiving it is over 18.

The shares must be held for at least 5 years to qualify for these tax benefits.


Gains made on the disposal of ordinary shares in a VCT are not considered to be chargeable gains. No capital gains tax relief is available for losses incurred.

The shares must be held for at least 5 years to qualify for this tax benefit.

Tax rules and allowances are not guaranteed and may change in the future. VCT investments can be high risk and are not suitable for most investors. Specialist advice is essential to establish both eligibility and suitability for such investments. Whilst VCT investments may have significant tax benefits, the value of investments can fall as well as rise and you may not get back all, or even any, of the amount you originally invested.

P J G Financial Services Ltd is authorised and regulated by the Financial Conduct Authority. Financial Services Register No: http://www.fca.org.uk/register.

P J G Financial Services Ltd Registered Address: Walton Road, Wetherby, West Yorkshire, LS22 5DZ. Registered in England & Wales, No. 4435416.

Neither P J G Financial Services Ltd nor its representatives can be held responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

The Financial Conduct Authority does not regulate National Savings or some forms of mortgage, tax planning, taxation and trust advice, offshore investments or school fees planning.

The Financial Ombudsman Service (FOS) is an agency for arbitrating on unresolved complaints between regulated firms and their clients. Full details of the FOS can be found on its website at http://www.financial-ombudsman.org.uk.

The information contained within this site is subject to the UK regulatory regime and is therefore targeted primarily at consumers based in the UK.

Please read our Privacy Statement before completing any enquiry form or before sending an email to us.