Venture Capital Trusts
Nothing ventured, nothing gained
Established to encourage investment in vibrant smaller companies, Venture Capital Trusts (VCT) are usually large funds (£10m to £50m), which means they are able to spread their investments over a number of companies, typically 30 to 50 per trust.
- VCT investment rules
- Companies chosen must be quoted on the London Stock Exchange
- These companies must meet the same qualifications as single Enterprise Investment Scheme (EIS) companies
- 70 per cent of funds raised must be invested in qualifying companies within three years of raising the money
- The remaining 30 per cent can be invested in whatever the manager chooses
- No more than £1 million can be invested in one company in any single tax year
- Two investments in the same company must be separated by at least six months
- Investments in any one company must be less than
15 per cent of the total amount invested - At least 10 per cent of any one qualifying investment must be in ordinary shares
- Across the portfolio, at least 30 per cent of holdings must be in ordinary shares
- VCTs cannot retain more than 15 per cent of the income received from shares and securities
- For investments of up to £200,000 in any one tax year, you could receive a 30 per cent income tax rebate if you hold the shares for at least five years. Dividends are tax-free on both the income that you derive from the underlying investments and capital gains realised inside the VCT portfolio. There is also an exemption from capital gains tax on the shares sold at a profit.
For more information or to discuss anything in this article feel free to contact Doug McLean via email or phone.
