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.

Why us?

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.

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

Name Type Min Invest Amount Raising Amount Raised Initial Charge Total Discount* 100% Trail Refund** Prospectus Factsheet
Amati VCT
AIM £3k £3.5m £1.51m 2% 0%
0.75% Apply Factsheet
Amati VCT2 AIM £3k £3.5m £1.57m 2% 0% 0.75% Apply Factsheet
ProVen VCTGeneralist £5k £15m £10m 5.5% 2.75% 0% Apply Factsheet
Maven VCTs 1-5Generalist£5k£18m£02.5%2%0%Apply Factsheet
Octopus VCT 1&2AIM£5k£20m£03%2% (ends 30.09.14)0.5%ApplyFactsheet
Octopus Titan VCTsGeneralist£5k£50m£0k3%2.5%0.5%ApplyFactsheet
Unicorn Top-upAIM£2k£15m£05.5%3%0%Apply 
Foresight Group
Generalist £3k £20m £11.5m 5.5% 2.5%
0.5% Apply Factsheet
Albion VCTGeneralist£6k£17.6m£16.5m3%0%0.4%ApplyFactsheet
Downing THREE Limited Life £5k £25m £10.7m 5.5% 2.5% 0.25% Apply Factsheet
Hargreave HaleAIM£5k£20m£03.5%1% for existing holders0%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 10P10.58100.07176.9165.01-2.328.98VCT GeneralistBuy
Maven Income and Growth VCT 2 Plc Ord 10P21.7961.23180.4857.34-7.133.76VCT GeneralistBuy
Maven Income and Growth VCT 3 Plc Ord 10P6.2689.15187.3779.40-3.666.86VCT GeneralistBuy
Maven Income and Growth VCT 4 Plc 10p Ord5.3243.03135.1295.20-8.885.48VCT GeneralistBuy
Maven Income and Growth VCT 6 Plc Ord 50p10.3866.83194.7355.77-22.001.38VCT GeneralistBuy
Maven Income and Growth VCT 5 PLC Ord 10P46.41125.0198.3039.34-9.766.06VCT GeneralistBuy
Octopus Titan VCT 112.6669.7970.7691.52-4.125.70VCT GeneralistBuy
Octopus Titan VCT 212.6669.8570.8191.52-4.125.70VCT GeneralistBuy
Octopus Titan VCT 310.7648.4142.6491.25-4.935.76VCT GeneralistBuy
Octopus Titan VCT 420.7325.49-102.80-1.753.96VCT GeneralistBuy
Octopus Titan VCT 5 Ord 10P-4.12-7.00-91.801.31-VCT GeneralistBuy
Unicorn AIM VCT plc Ord 1P22.9078.62213.62141.40-10.184.76VCT AIM QuotedBuy
Albion Development VCT PLC D Ord 50 P10.7325.30-107.54-7.015.00VCT GeneralistBuy
Albion Development VCT PLC8.0436.7387.2273.31-4.527.14VCT GeneralistBuy
Albion Enterprise VCT PLC8.0337.2660.3294.83-5.095.56VCT GeneralistBuy
Albion VCT PLC3.3322.4653.4769.39-4.523.77VCT GeneralistBuy
Albion Technology & General VCT6.7919.1364.8780.82-7.835.10VCT GeneralistBuy
Amati VCT 2 PLC Ord 5P4.6454.8463.93110.62-6.663.84VCT AIM QuotedBuy
Amati VCT Plc12.4620.7844.4372.81-5.587.22VCT AIM QuotedBuy
Artemis VCT PLC19.5464.9377.6373.10-11.766.20VCT AIM QuotedBuy
Baronsmead VCT 212.5746.7892.29100.83-8.5113.55VCT GeneralistBuy
Baronsmead VCT 311.8944.0879.43108.06-7.4617.17VCT GeneralistBuy
Baronsmead VCT 49.1330.7365.2096.01-7.0414.65VCT GeneralistBuy
Baronsmead VCT 519.6159.0054.4679.02-4.14-VCT GeneralistBuy
Baronsmead VCT plc12.0640.3889.8177.78-8.0713.33VCT GeneralistBuy
British Smaller Companies VCT 2 PLC Ord 10P0.8524.2349.1763.00-11.918.11VCT GeneralistBuy
British Smaller Companies VCT4.6112.7095.85101.82-13.082.26VCT GeneralistBuy
Chrysalis VCT PLC25.4062.7553.4384.66-28.548.26VCT GeneralistBuy
Core VCT IV14.29-26.76-44.0052.70-50.66-VCT GeneralistBuy
Core VCT V22.22-38.89-42.8155.97-52.65-VCT GeneralistBuy
Core VCT plc35.55-18.67-21.8265.01-53.08-VCT GeneralistBuy
Core VCT plc B26.67-12.7643.700.0184,874.64-VCT GeneralistBuy

Featured 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.

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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

Thu, 1st May 2014 - 12:17

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.

Wed, 19th March 2014 - 18:00

The government will try to claw back up to £145 million in tax relief over the next five years from VCT providers, George Osborne said.

Tue, 4th February 2014 - 15:58

Investors are increasingly willing to pile their precious savings into VCTs, but what are the perks and pitfalls of the VCT option?

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.