VENTURE CAPITAL TRUSTS

At the moment the Chancellor places a limit of £200,000 that can be invested in VCTs in any one tax year. At present 30% is given back to the investor as a tax rebate. All of this is very good for the investor. An extra 30% to help kick start what is tax-exempt growth within a tax shelter is exceptionally good.

Look at the table. This shows that investing in VCTs under current tax exemption rules gives investors excellent financial engineering opportunities.

Tax Relief of VCTs

1. VCTs give 30% relief of initial investment against income tax, provided the VCT shares are held for a minimum of 5 years to preserve this tax relief.
   
   
2. There is no tax on dividends from the VCT.
   
   
3. In addition, there is no capital gains tax on sale of VCT shares by the investor.
   
   
4. There is no tax on capital gains made within the VCT, and the VCT Company can then pay these to investors as part of a tax-free dividend.
   
   

VCTs can be described as ‘Generalist’, “AIM” or “Specialist”. Some VCTs can be said to have an overall risk profile that is no worse, in our view, than a holding in any one FTSE 100 company. It is certainly worthwhile looking at Generalist and Specialist VCTs. It is our view that we no longer see VCTs as a fringe investment. We do believe they should be included within most investors’ portfolios as part of the agreed assets to be held in the higher risk sector.

The tax breaks really are superb. Ask us for help and information. For more on VCT investment choices, issues and tax relief do call us, or complete our Enquiry Form.