Venture
Capital Trusts ( VCTs ) - Savings and Investment
About Venture Capital Trusts
Venture
Capital Trusts ( VCTs )
Venture Capital Tursts ( VCTs ) provide capital finance
for small and expanding companies with the aim of making capital
gains for investors. They are a tax efficient way to invest large
sums of money and are aimed at medium to large net worth private
investors.
Venture
Capital Trusts were introduced in the Finance Act 1995 and they
have proved to be not as risky than originally thought. The last
Conservative government created VCTs to encourage investment into
new United Kingdom businesses.
Investors with larger portfolios can now invest up to £200,000.
VCT shares issued after 5 April 2000 need only be held for three
years to retain the initial tax reliefs, but to obtain the full
benefits of the investment, the shares should be held for as long
as possible. Most VCTs aim to invest the majority of assets in qualifying
companies, 80% of which should be established companies or management
buyouts. All VCTs, which have been running for a year or more, have
paid tax-free dividends.
A VCT
is actually a company in itself. You will effectively be investing
into a company, which in turn invests in small companies. The managers
of the VCT have three years in which to choose companies to invest
in and during this time they place the money into cash, gilts or
bonds. As they become more sophisticated VCTs are investing in funds
such as smaller company funds or funds of hedge funds, to maximise
their returns.
You
have to maintain a VCT for a minimum of three years to benefit from
the tax reliefs, this was reduced from five years. VCTs can usually
be separated into three different types, AIM, Technology and General.
Some trusts invest in a combination of all three of these areas.
VCTs have now started to become more focused and some invest only
in one sector for example media or healthcare.
List
of Venture Capital Providers
OCIS
provide general financial information, we urge you to consult an
Independent
Financial Adviser ( IFA )
before making any important decisions about your finances. |
