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.
It’s Simple - Interactive Investor charges a one-off fee of £30 (VAT inclusive) to process a new issue VCT application. We will reinvest all broker discounts in new shares and 100% of any trail commission we receive is credited to your account. Furthermore, it’s free to transfer VCTs held with another broker to Interactive Investor and we will credit your account with any transferred trail commission if available. Standard dealing rates apply to investments in existing VCTs.
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.
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.
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|
|Amati VCT ||AIM||£3k||£3.5m||£0m||5%||3% (1% Early Bird discount ends 13/03/14)||0.75%||Apply||Factsheet|
|Amati VCT2||AIM||£3k||£3.5m||£0m||5%||3.5% (1% Early Bird discount ends 13/03/14)||0.75%||Apply||Factsheet|
|Maven Income & Growth 1-6||Generalist||£5k||£20m||£15m||3.5%||1%||0.375%||Apply||Factsheet|
|Octopus Titan 1-5||Generalist||£5k||£50m||£18m||5.5%||2.5% ||0.5%||Apply||Factsheet|
|Octopus AIM VCT||AIM||£5k||£8.2m||£0||3%||2.5%||0.5%||Apply|
|Pembroke VCT Top-up offer||Generalist||£3k||£1.65m||£1.24m||2%||0%||0.25%||Apply||Factsheet|
|TIME Reboot VCT||Generalist||£3k||£20m||£1m||5.5%||3.5%(ends 28/02/14)* ||0%||Apply||Factsheet|
|Foresight Group ||Generalist||£3k||£20m||£3||5.5%||4% (ends 28/02/14)* ||0.5%||Apply||Factsheet|
|Foresight Solar||Limited Life||£3k||£20m||£8.5m||5.5%||3%||0.5%||Apply||Factsheet|
|Hargreave Hale AIM VCT 1 & 2||AIM||£5k||£20m||£8.7m||3.5%||1% ||0%||Apply|
|Puma VCT 10||Limited Life||£5k||£30m||£4.5m||3%||1% ||0.35%||Apply||Factsheet|
|Mobeus VCTs linked offer||Generalist||£6k||£24m||£4m||3.25%||0%||0.5%||Apply||Factsheet|
|Edge Performance VCT 'H' Shares||Specialist||£5k||£7.1m||£1.7m||5%||3% (ends 16/12/13)*||0%||Apply||Factsheet|
|Albion VCT||Generalist||£6k||£15m||£500k||3%||0.5%. 1% for existing investors (ends 31/01/14)*||0.4%||Apply||Factsheet|
|Downing ONE||Generalist||£5k||£20m||£225k||5.5%||3%. 3.5% for existing investors (ends 14/02/14)* ||0.25%||Apply||Factsheet|
|Downing THREE||Limited Life||£5k||£25m||£290k||5.5%||3%. 3.5% for existing investors (ends 14/02/14)*||0.25%||Apply||Factsheet|
|Ventus VCT & Ventus 2 VCT D Shares||Specialist||£5k||£20m||£1m||3%||0%||0.4%||Apply|
|British Smaller Companies VCT & VCT 2||Generalist||£6k||£30m||£750k||5.5%||3%. 3.5% for existing investors (ends 28/03/14)*||0.5%||Apply|
Elderstreet VCT – Sustainable Technology Share Class
|Elderstreet VCT||Generalist||£6k||£10m||£0m||5.5%||3.5%(ends 14/02/14)*||0.25%||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 & Growth VCT 4 C 10p||-||-||-||101.01||-14.86||-||VCT Generalist Pre Qualifying||Buy|
|Maven Income and Growth VCT 1 Plc Ord 10P||7.75||80.37||202.61||66.26||-1.15||8.70||VCT Generalist||Buy|
|Maven Income and Growth VCT 2 Plc Ord 10P||5.00||45.28||263.34||57.00||-15.58||7.48||VCT Generalist||Buy|
|Maven Income and Growth VCT 3 Plc Ord 10P||9.78||75.68||178.08||80.11||-5.76||6.62||VCT Generalist||Buy|
|Maven Income and Growth VCT 4 Plc 10p Ord||-3.42||47.91||116.65||96.37||-13.36||5.69||VCT Generalist||Buy|
|Maven Income and Growth VCT 6 Plc Ord 50p||23.12||56.70||197.19||53.60||-20.71||1.18||VCT Generalist||Buy|
|Maven Income and Growth VCT 5 PLC Ord 10P||26.29||65.37||79.27||41.11||-30.07||6.26||VCT AIM Quoted||Buy|
|Octopus Titan VCT 1||5.99||52.33||35.56||91.39||-6.04||2.91||VCT Generalist||Buy|
|Octopus Titan VCT 2||9.07||56.81||39.55||91.41||-6.06||5.82||VCT Generalist||Buy|
|Octopus Titan VCT 3||2.13||31.39||16.94||87.58||-4.37||11.94||VCT Generalist||Buy|
|Octopus Titan VCT 4||19.19||-0.37||-||98.68||-4.74||3.19||VCT Generalist||Buy|
|Octopus Titan VCT 5 Ord 10P||-10.00||-10.00||-||88.89||1.25||-||VCT Generalist||Buy|
|Unicorn AIM VCT plc Ord 1P||45.39||39.74||203.96||142.83||-13.18||12.90||VCT AIM Quoted||Buy|
|Albion Development VCT PLC D Ord 50 P||11.34||13.74||-||106.00||-10.38||5.26||VCT Generalist||Buy|
|Albion Development VCT PLC||9.66||41.00||42.63||72.96||-4.74||7.19||VCT Generalist||Buy|
|Albion Enterprise VCT PLC||18.91||33.55||58.22||95.73||-5.98||5.56||VCT Generalist||Buy|
|Albion VCT PLC||4.08||40.14||61.07||70.96||-5.23||7.43||VCT Generalist||Buy|
|Albion Technology & General VCT||26.32||28.77||60.87||83.57||-7.26||8.06||VCT Generalist||Buy|
|Amati VCT 2 PLC Ord 5P||21.19||56.20||202.88||127.19||-3.88||5.11||VCT AIM Quoted||Buy|
|Amati VCT Plc||10.47||3.81||84.22||79.07||-2.30||3.88||VCT AIM Quoted||Buy|
|Artemis VCT PLC||44.48||55.90||103.22||76.57||-13.64||6.05||VCT AIM Quoted||Buy|
|Baronsmead VCT 2||13.12||50.21||93.48||109.36||-14.50||18.72||VCT Generalist||Buy|
|Baronsmead VCT 3||13.20||49.00||85.68||117.98||-13.33||15.16||VCT Generalist||Buy|
|Baronsmead VCT 4||8.87||34.64||58.91||102.64||-12.32||18.89||VCT Generalist||Buy|
|Baronsmead VCT 5||36.25||46.09||68.94||83.22||-8.07||2.61||VCT Generalist||Buy|
|Baronsmead VCT plc||17.13||45.81||96.31||83.74||-14.02||16.38||VCT Generalist||Buy|
|British Smaller Companies VCT 2 PLC Ord 10P||6.86||25.79||85.74||66.86||-13.81||7.81||VCT Generalist||Buy|
|British Smaller Companies VCT||17.13||49.44||87.30||103.13||-14.18||6.21||VCT Generalist||Buy|
|Chrysalis VCT PLC||-13.63||24.19||11.54||82.75||-38.97||16.34||VCT Generalist||Buy|
|Core VCT IV||-9.09||-37.48||-59.07||42.24||-52.65||-||VCT Generalist||Buy|
|Core VCT V||4.88||-46.92||-62.84||45.69||-52.94||-||VCT Generalist||Buy|
|Core VCT plc||-14.90||-46.60||-33.03||49.88||-59.90||-||Unclassified||Buy|
|Crown Place VCT||-0.00||29.82||82.54||30.98||-3.16||-||VCT Generalist||Buy|
Featured VCT Manager
At TIME Investments (TIME) we put the needs of our clients at the forefront of everything we do. We pride ourselves on our superior client service, our commitment to innovation and our track record of delivering stable long term performance. We offer products to clients of financial advisers, wealth managers, discretionary investment managers, family offices and charities. Our product range includes Inheritance Tax (IHT) solutions and Actively Managed Funds.
Maven Capital Partners is a leading Private Equity 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 £300m of assets for a variety of client funds, including 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.
What makes Octopus different? At Octopus we take a different approach to other investment companies. We listen to our investors and we design products that really meet their needs to make dealing with us a simple, transparent, and enjoyable, experience. And it’s working. We’re are the largest VCT provider in the UK and one of the fastest growing investment management companies. More than 50,000 customers have trusted us to manage over £3bn of their money.
ProVen VCT, managed by Beringea, invests in a carefully selected diversified portfolio of UK based unquoted companies which have significant growth potential. Beringea's management has delivered excellent performance for the fund, with ProVen VCT placed within the four best performing generalist VCTs over the past 10 years, (Source: AIC 20 February 2014). Past performance is not a guide to future performance.
Pembroke VCT plc is a new venture capital trust which is seeking to raise £20 million to invest in a diversified portfolio of smaller companies, being principally unquoted companies, with the object of generating significant capital appreciation whilst enabling Investors to benefit from substantial tax benefits. Pembroke VCT is part of the Oakley Group which is an asset management and financial advisory business with over $1 billion of assets under management.
Edinburgh based Amati Global Investors is an investment management company which brings together a team of highly experienced investment managers to focus solely on the dynamic small and mid-cap end of the UK stock market, as well as the some of the UK’s most innovative small private companies. Amati prides itself in offering excellent customer service, and providing investors with clear, regular and full information about our funds.
Register to receive alerts on future VCT launches.
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.
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.
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