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 £1.1m 5% 3%
0.75% Apply Factsheet
Amati VCT2 AIM £3k £3.5m £1.25m 5% 3% 0.75% Apply Factsheet
ProVen VCTGeneralist £5k £15m £10m 5.5% 2.75% 0% Apply  Factsheet
Maven Income & Growth 1-6 Generalist £5k £25m £20.4m 3.5% 1% 0.375% Apply Factsheet
Unicorn AIM £2k £20m £7.8m 3.25% 1% 0.375% Apply Factsheet
Octopus Titan 1-5 Generalist £5k £13.5m £0.8m 5.5% 2.5%
0.5% Apply Factsheet
Pembroke VCT Top-up offer Generalist £3k £1.65m £1.65m 2% 0% 0.25% Closed Factsheet
Foresight Group
Generalist £3k £20m £9.75m 5.5% 2.5%
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 £10.5m 3.5% 1%
0% Apply  
Puma VCT 10 Limited Life £5k £30m £12mm 3% 1%
0.35% Apply Factsheet
Mobeus VCTs linked offer Generalist £6k £34m £32.4m 3.25% 0% 0.5% Apply Factsheet
Edge Performance VCT 'H' Shares Specialist £5k £7.1m £1.7m 5% 2.75% 0% Apply Factsheet
Albion VCT Generalist £6k £15m £9.4m 3% 0% 0.4% Apply Factsheet
Downing ONE Generalist £5k £20m £2.3m 5.5% 2.5%
0.25% Apply Factsheet
Downing THREE Limited Life £5k £25m £5.5m 5.5% 2.5% 0.25% Apply Factsheet
Ventus VCT & Ventus 2 VCT D Shares Specialist £5k £20m £1m 3% 0% 0.4% Apply  
Baronsmead VCT Generalist £4k £40m £24 3% 0% 0.4% Apply  
British Smaller Companies VCT & VCT 2 Generalist £6k £30m £10.8m 5.5% 2.5% 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

Existing VCTs

Name1 Year (%)3 Years (%)5 Years (%)NAVDiscountNDYSector
Maven Income & Growth VCT 4 C 10p---94.00-8.51-VCT Generalist Pre QualifyingBuy
Maven Income and Growth VCT 1 Plc Ord 10P3.0177.62132.1666.360.228.57VCT GeneralistBuy
Maven Income and Growth VCT 2 Plc Ord 10P5.8556.59273.7259.02-14.437.13VCT GeneralistBuy
Maven Income and Growth VCT 3 Plc Ord 10P8.1374.45154.5480.94-6.726.62VCT GeneralistBuy
Maven Income and Growth VCT 4 Plc 10p Ord0.9254.11150.8296.34-10.215.42VCT GeneralistBuy
Maven Income and Growth VCT 6 Plc Ord 50p20.2353.01190.2053.71-23.661.22VCT GeneralistBuy
Maven Income and Growth VCT 5 PLC Ord 10P23.0074.06130.1441.91-30.216.15VCT GeneralistBuy
Octopus Titan VCT 15.4953.8850.9793.08-7.072.89VCT GeneralistBuy
Octopus Titan VCT 28.5758.4155.4093.08-7.075.78VCT GeneralistBuy
Octopus Titan VCT 34.5734.5333.0492.78-6.7711.56VCT GeneralistBuy
Octopus Titan VCT 423.267.69-105.74-5.903.02VCT GeneralistBuy
Octopus Titan VCT 5 Ord 10P-4.64-7.50-93.85-1.44-VCT GeneralistBuy
Unicorn AIM VCT plc Ord 1P45.2140.61202.74144.51-13.164.78VCT AIM QuotedBuy
Albion Development VCT PLC D Ord 50 P11.3413.74-104.90-9.445.26VCT GeneralistBuy
Albion Development VCT PLC9.6641.0050.8471.90-2.647.14VCT GeneralistBuy
Albion Enterprise VCT PLC15.6633.5558.2295.87-6.125.56VCT GeneralistBuy
Albion VCT PLC4.0837.8475.3271.08-5.387.43VCT GeneralistBuy
Albion Technology & General VCT29.4223.8468.5883.42-4.104.69VCT GeneralistBuy
Amati VCT 2 PLC Ord 5P22.6161.54187.80127.47-4.695.56VCT AIM QuotedBuy
Amati VCT Plc16.707.55102.8081.48-4.586.43VCT AIM QuotedBuy
Artemis VCT PLC45.9870.78122.0575.63-10.255.89VCT AIM QuotedBuy
Baronsmead VCT 215.2654.4999.42100.93-5.1318.28VCT GeneralistBuy
Baronsmead VCT 2 NAV------VCT GeneralistBuy
Baronsmead VCT 314.5850.2090.58111.15-6.6614.94VCT GeneralistBuy
Baronsmead VCT 3 NAV------VCT GeneralistBuy
Baronsmead VCT 49.6535.1770.1397.05-6.2318.68VCT GeneralistBuy
Baronsmead VCT 4 Nav------VCT GeneralistBuy
Baronsmead VCT 528.4845.4165.4583.43-11.302.70VCT GeneralistBuy
Baronsmead VCT plc15.9546.3098.5377.76-5.4816.33VCT GeneralistBuy
Baronsmead VCT plc NAV------VCT GeneralistBuy
British Smaller Companies VCT 2 PLC Ord 10P7.7826.88143.8165.24-10.917.74VCT GeneralistBuy
British Smaller Companies VCT17.1923.1788.66103.62-15.086.25VCT GeneralistBuy
Chrysalis VCT PLC-7.2233.4121.7996.51-32.6512.69VCT GeneralistBuy

Featured VCT Manager

  • 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.

  • Our new share offer gives you a chance to invest in both Octopus AIM VCT and Octopus AIM VCT 2 (formerly Octopus Second AIM VCT). As a current investor, you will know that these both invest in smaller companies, give an access to diversified portfolios of AIM companies and offer a combination of long-term growth potential and quarterly tax-free dividends, as each VCT is aiming to pay dividends twice a year.

  • 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.

  • 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.

  • ProVen VCT plc is a generalist fund that invests in a diversified portfolio of UK based unquoted companies that have significant potential for growth.
    After it has invested in a business, Beringea, the Manager of ProVen VCT, remains closely involved, aiming to add value wherever possible. As the values of the investments increase, Beringea aims to identify opportunities for profitable realisations. ProVen VCT is the 2nd best-performing VCT launched in the tax year.

    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.

  • 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.

Email Alerts

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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

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?

Wed, 29th January 2014 - 10:41

Venture capital trusts look to be moving onto the radar, particularly for long-term investors looking for tax efficiency and reliable income.

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.