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 a new to Interactive Investors or an existing client the application or transfer in process for VCTs is straightforward.

Why us?

  • 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.

Disclaimer

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.

Risk Warning

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

NameTypeMin InvestAmount RaisingAmount RaisedInitial ChargeTotal Discount*100% Trail Refund**ProspectusFactsheet
Albion VCTs Prospectus Top Up OffersGeneralist £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 IssuesAIM£3k or £2.5k in each VCT (Amati VCT & Amati VCT 2)£8m, in aggregate£03%2%0.375% Apply 
Triple Point Income VCT PlcLimited Life£5k£30m£10m5%3%0.5%ApplyFactsheet
ProVen Growth & Income VCTGeneralist£5k£30m + £10 over allotment£3m5.5% for execution only – Commission of 2.25% initial plus trailExisting 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.
0.5%ApplyFactsheet
Octopus Titan VCTGeneralist£3k£70m + £50m over allotment facility£4m5.5%1% earlybird (before 16/12/16) and 1% loyalty discount. 2.5% initial can also be rebated by broker.0.5%Apply
Foresight VCTGeneralist£3k£30m £18m5.5%4.5% for existing investors0.5%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.

Existing VCTs

Name1 Year (%)3 Years (%)5 Years (%)NAVDiscountNDYSector
Maven Income and Growth VCT 1 Plc Ord 10P0.2529.7379.6363.36-2.949.76VCT GeneralistBuy
Maven Income and Growth VCT 2 Plc Ord 10P-1.1139.9464.5853.19-16.349.55VCT GeneralistBuy
Maven Income and Growth VCT 3 Plc Ord 10P17.6433.0479.2089.26-5.896.85VCT GeneralistBuy
Maven Income and Growth VCT 4 Plc 10p Ord9.7024.9325.3396.07-7.885.93VCT GeneralistBuy
Maven Income and Growth VCT 5 PLC Ord 10P8.1466.52177.9339.57-8.387.45VCT GeneralistBuy
Maven Income and Growth VCT 6 Plc Ord 10p13.5038.02156.7659.04-7.701.93VCT GeneralistBuy
Octopus Titan VCT7.3634.65100.5396.84-7.714.48VCT GeneralistBuy
Unicorn AIM VCT plc Ord 1P-1.1233.79131.08156.09-12.879.19VCT AIM QuotedBuy
Albion Development VCT PLC2.9117.6848.9468.94-4.277.58VCT GeneralistBuy
Albion Enterprise VCT PLC2.1718.5952.6994.73-6.575.65VCT GeneralistBuy
Albion VCT PLC5.2316.2936.2270.40-7.677.69VCT GeneralistBuy
Albion Technology & General VCT-5.322.7419.0669.47-6.087.66VCT GeneralistBuy
Amati VCT 2 PLC Ord 5P7.9212.0646.92115.26-6.525.77VCT AIM QuotedBuy
Amati VCT Plc2.7915.2126.4167.43-6.947.06VCT AIM QuotedBuy
Artemis VCT PLC O Inc31.1687.89203.6175.62-6.785.67VCT AIM QuotedBuy
Baronsmead Second Venture Trust Plc Ord 10P2.1122.5465.3190.99-5.7619.80VCT GeneralistBuy
Baronsmead Venture Trust PLC1.1124.7472.4186.46-4.8718.24VCT GeneralistBuy
British Smaller Companies VCT 2 PLC Ord 10P11.6823.1750.1460.20-3.657.76VCT GeneralistBuy
British Smaller Companies VCT20.9443.9562.5698.32-0.8323.71VCT GeneralistBuy
Calculus VCT PLC C5.0015.7621.9573.9121.775.00VCT GeneralistBuy
Calculus VCT PLC Ord 1P-20.4354.5062.2328.38-18.96-VCT GeneralistBuy
Chrysalis VCT PLC17.9993.64140.1579.75-19.757.81VCT GeneralistBuy
Crown Place VCT2.7917.1945.7529.71-7.448.18VCT GeneralistBuy
Downing One VCT PLC Ord1P1.329.1143.9388.13-0.586.81VCT AIM QuotedBuy
Downing TWO VCT plc A36.10103.82103.620.0124,942.56-VCT GeneralistBuy
Downing TWO VCT plc D26.4015.2113.8234.80-56.90-VCT GeneralistBuy
Downing TWO VCT plc E-0.404,905.004,905.000.104,904.86-VCT GeneralistBuy
Downing TWO VCT plc F-4.14-5.37-70.00-11.438.06VCT GeneralistBuy

Featured VCT Manager

  • 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.

  • 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.

Risk Warning

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.

VCTs analysis

Mon, 24th November 2014 - 09:00

The FCA must start laying charges against the "untouchables" who show no regard for the rule book, says Money Observer editor Andrew Pitts.

Tue, 4th November 2014 - 10:32

Discount brokers are still taking commission on the sales of venture capital trusts, despite efforts by regulators to stamp out the practice.

Thu, 1st May 2014 - 11:17

In the current climate it makes sense to diversify your income stream and there are a number of "offbeat" sources of income that investors could consider.