Venture Capital Trusts are complex investments and are not suitable for everyone, you should seek independent financial advice before entering into this type of investment.
Levels and bases of and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor.
The value of the investment can go down as well as up and you may not get back as much as you put in.
Venture Capital Trusts (VCT)
The Venture Capital Trust scheme started on 6 April 1995, and is designed to encourage individuals to invest indirectly in a range of small higher-risk trading companies, whose shares and securities are not listed on a recognised stock exchange, by investing through Venture Capital Trusts (VCTs).
If you invest in a VCT, you spread the investment risk over a number of companies.
VCTs are companies listed on the London Stock Exchange, and are similar to investment trusts. They are run by fund managers who are usually members of larger investment groups. Investors can subscribe for, or buy, shares in a VCT, which invests in trading companies, providing them with funds to help them develop and grow.
VCTs must be approved by HMRC for the purpose of the scheme. Approval is granted if they meet certain conditions. If you invest in them you may be entitled to various income tax and capital gains tax reliefs, and VCTs are exempt from corporation tax on any gains arising on the disposal of their investments.
HMRC approval of a VCT means that it currently meets certain criteria, enabling investors to qualify for certain tax reliefs. It does not guarantee the safety or success of any investments you make in a VCT.
It is important to remember that these are long term, illiquid investments, which carry a high risk of loss of capital and, as such, are only likely to be suitable for sophisticated, wealthy investors as part of a diversified portfolio.
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