Venture Capital Trusts
What is a VCT?
Venture capital trusts started life in 1995. They were launched to encourage investment in early stage companies by offering attractive tax breaks to investors. VCTs must be approved by HMRC in order for investors to receive the tax breaks, and there are limits on the size of companies in which VCTs can invest.
When investors subscribe for new shares in a venture capital trust, the tax breaks are extremely attractive. Investors can receive income tax relief of 30 per cent of the amount invested, up to £200,000. All dividends paid out of VCTs are tax-free, and all capital gains are also tax-free. This can make VCTs a viable addition to pension planning, particularly when pension limits for tax relief have been reached.
However, these are early stage investments and as such carry considerably higher risks than investing in more developed, stock market-listed companies. That said, the sector has cleared out in recent years and experienced investment managers now dominate the market.
Are VCTs right for me?
Investors should feel comfortable that they meet the following criteria:
- High net worth and sophisticated investors who are UK residents.
- Investors who have a sufficient income tax liability to reclaim income tax relief at 30% of the amount subscribed.
- Investors who have realised a capital gain that would attract Capital Gains Tax.
- Investors who will not need access to their capital for at least five years and are comfortable with higher risk investments.
How to Apply
Whether you are new to Interactive Investor or an existing client the application or transfer in process for VCTs is straightforward.
- We charge a market-leading one-off fee of £30 (inc VAT) to process your VCT application
- Most VCTs offer broker discounts - which we will reinvest fully for you in new shares
- Unlike some other brokers, we credit all the trail income we receive from your VCT investments, as cash in your account
The VCT Market
With the growth of the VCT market they have become considerably more diverse. There are generally four main types of VCT for sophisticated investors to consider:
- Generalist VCTs - These VCTs invest in a wide range of companies in different sectors and stages of development.
- AIM VCTs - As the name suggests they only invest in companies listed, or about to become listed, on the Alternative Investment Market
- Specialist VCTs - Tend to focus their investment expertise on one particular sector eg. Healthcare
- Limited Life VCTs - Set out on a 5+ year plan and will wind up the VCT at the end of this period.
Interactive Investor does not endorse any particular product. If you are unsure about whether an investment is suitable for you please seek advice from a financial advisor.
The price and value of investments and their income fluctuates: you may get back less than the amount you invested.The tax treatment of investments is subject to tax law and HMRC practice which are subject to change.
New Issue VCTs
|Name||Type||Min Invest||Amount Raising||Amount Raised||Initial Charge||Total Discount*||100% Trail Refund**||Prospectus||Factsheet|
|Elderstreet VCT plc||Generalist||£6,000||£10m plus £10m overallotment facility||£1.5m||5.5%||Early Bird reinvest of 4.5% by 31 Jan and 4% by 28 Feb 2017||n/a||Apply|
|Pembroke VCT 2016/17 B share Offer||Generalist||£3,000||£ 15m||£ 2.0m||3%||2% early bird to 13th January & 1% early bird to 3rd March||n/a||Apply||Factsheet|
|Hargreave Hale AIM VCT 1 & 2||AIM||£2500 per VCT minimum subscription £5000||£ 20m||£ 0||3%||In initial Charge 3.5% + annual management charge of 1.5%||Total Discount 2% (until 10th February 2017 1% thereafter)||Apply||Factsheet|
|Albion VCTs Prospectus Top Up Offers||Generalist||£6,000||£ 24m||£ 1.3 m (as at 6 Dec 16)||3%||n/a||0.4% for 5 years||Apply||Factsheet|
|Amati VCTs Top Up Share Issues||AIM||£3k or £2.5k in each VCT (Amati VCT & Amati VCT 2)||£8m, in aggregate||£0||3%||2%||0.375%||Apply|
|Triple Point Income VCT Plc||Limited Life||£5k||£30m||£10m||5%||3%||0.5%||Apply||Factsheet|
|ProVen Growth & Income VCT||Generalist||£5k||£30m + £10 over allotment||£29m |
The closure date is 26/01/2016 and the applications must be submitted by that day.
|5.5% for execution only - Commission of 2.25% initial plus trail||Existing shareholders: 2% up until 1pm|
13/01/17 and 0.5% after until close. New shareholders: 1% up until 1pm on 13/01/17.
Discount provided in through additional shares.
|Octopus Titan VCT||Generalist||£3k||£70m + £50m over allotment facility||£4m||5.5%||1% earlybird (before 16/12/16) and 1% loyalty discount. 2.5% initial can also be rebated by broker.||0.5%||Apply|
|Foresight VCT||Generalist||£3k||£30m||£18m||5.5%||4.5% for existing investors||0.5%||Apply|
Early bird discount. Initial discounts reinvested for extra shares
**All trail commission, if available, is credited to your account as cash. Trail is paid annually up to 5 years after initial investment. Terms vary
The rates above have been checked with the VCT providers but are subject to change.
|Name||1 Year (%)||3 Years (%)||5 Years (%)||NAV||Discount||NDY||Sector|
|Maven Income and Growth VCT 1 Plc Ord 10P||2.65||33.98||79.23||-||-||9.60||VCT Generalist||Buy|
|Maven Income and Growth VCT 2 Plc Ord 10P||-1.22||39.80||57.78||-||-||9.66||VCT Generalist||Buy|
|Maven Income and Growth VCT 3 Plc Ord 10P||16.24||39.79||77.75||-||-||6.93||VCT Generalist||Buy|
|Maven Income and Growth VCT 4 Plc 10p Ord||9.70||30.14||23.33||-||-||5.93||VCT Generalist||Buy|
|Maven Income and Growth VCT 5 PLC Ord 10P||12.80||61.68||225.14||-||-||7.40||VCT Generalist||Buy|
|Maven Income and Growth VCT 6 Plc Ord 10p||9.05||43.20||156.76||-||-||1.93||VCT Generalist||Buy|
|Octopus Titan VCT||5.72||26.49||110.91||-||-||4.26||VCT Generalist||Buy|
|Unicorn AIM VCT plc Ord 1P||0.52||23.79||128.24||-||-||9.47||VCT AIM Quoted||Buy|
|Albion Development VCT PLC||2.47||15.90||49.03||-||-||7.69||VCT Generalist||Buy|
|Albion Enterprise VCT PLC||6.79||23.95||59.59||-||-||5.41||VCT Generalist||Buy|
|Albion VCT PLC||8.56||24.48||45.81||-||-||7.46||VCT Generalist||Buy|
|Albion Technology & General VCT||-7.05||-0.07||19.22||-||-||7.36||VCT Generalist||Buy|
|Amati VCT 2 PLC Ord 5P||12.97||12.30||50.05||-||-||5.57||VCT AIM Quoted||Buy|
|Amati VCT Plc||7.62||13.93||33.17||-||-||6.79||VCT AIM Quoted||Buy|
|Artemis VCT PLC O Inc||44.99||93.61||265.74||-||-||17.52||VCT AIM Quoted||Buy|
|Baronsmead Second Venture Trust Plc Ord 10P||3.11||23.43||67.66||-||-||19.65||VCT Generalist||Buy|
|Baronsmead Venture Trust PLC||2.34||26.26||74.51||-||-||18.02||VCT Generalist||Buy|
|British Smaller Companies VCT 2 PLC Ord 10P||12.65||27.17||53.45||-||-||7.69||VCT Generalist||Buy|
|British Smaller Companies VCT||23.16||45.38||67.72||-||-||27.71||VCT Generalist||Buy|
|Calculus VCT PLC C||5.00||15.76||21.95||-||-||5.00||VCT Generalist||Buy|
|Calculus VCT PLC Ord 1P||-25.62||44.42||51.65||-||-||-||VCT Generalist||Buy|
|Chrysalis VCT PLC||12.43||96.45||138.88||-||-||7.94||VCT Generalist||Buy|
|Crown Place VCT||8.40||21.46||59.44||-||-||7.89||VCT Generalist||Buy|
|Downing One VCT PLC Ord1P||2.45||10.02||47.00||-||-||6.77||VCT AIM Quoted||Buy|
|Downing TWO VCT plc A||36.10||103.82||103.62||-||-||-||VCT Generalist||Buy|
|Downing TWO VCT plc D||26.40||15.21||13.82||-||-||-||VCT Generalist||Buy|
|Downing TWO VCT plc E||-0.40||4,905.00||4,905.00||-||-||-||VCT Generalist||Buy|
|Downing TWO VCT plc F||-4.14||-5.37||-||-||-||8.06||VCT Generalist||Buy|
Featured VCT Manager
Unicorn Asset Management Limited is an independently owned and managed investment management company. Founded in 2000, Unicorn offers both open and closed ended investment funds, including an AIM Venture Capital Trust, designed to satisfy a variety of investor requirements.
Building value over time for our shareholders and clients depends on one factor, and one factor alone – performance: investment performance and business performance.
Maven Capital Partners is a leading Private Equity, VCT and Alternative Asset Manager, providing growth capital to UK SMEs and tax-efficient investment opportunities for investors. Maven is one of the most active private equity fund managers in the country, managing around £340m of assets for a variety of client funds, including six Venture Capital Trusts, the Scottish Loan Fund, Capital for Enterprise Fund A, the Greater Manchester Loan Fund and a number of family offices and high net worth individuals.
Any investments in VCTs should be viewed as a high risk and long-term commitment. (i.e. five years for VCT schemes, but plan for a longer time-frame). Due to the nature of the underlying assets these schemes are highly illiquid. Investors must be aware they may have difficulty or be unable to realise their shares at levels close to that which reflect the value of the underlying assets. The risk reward ratio of investing in smaller companies is inflated as the risk of failure is higher. Tax incentives available to investors exist in order to attract investment into an asset class that warrants high risk categorisation, but are subject to tax law and HMRC practice, both of which can change. These are complex products and are only suitable for sophisticated investors. Please ensure you understand the risks involved. If you are unsure about the suitability of any investment please seek financial advice.