Venture Capital Trusts. Are they suitable for you?

Venture Capital Trusts (VCTs) are investment companies that are listed on the London Stock Exchange and are run by a Fund Manager.  They offer investors the chance to invest in small firms, not quoted on the stock exchange, who are looking for further investment to help them grow.

A VCT, is highly tax-efficient, as the government offers generous tax breaks to VCT investors.  They currently attract income tax relief of 30% on new investments of up to £200,000 per tax year (2022/23) and you will pay no Capital Gains Tax on profits. Also, if your VCT pays dividends, there is no tax payable on those.

Whilst offering considerable tax advantages, it must be remembered, that VCTs are not for everyone. They are at a higher risk than investing in blue-chip companies. By pooling your investments with others, VCTs allow you to spread the risk over several small companies. There are very strict rules on how Venture Capital Trusts can invest your pooled money for it to qualify as a VCT.

When might a Venture Capital Trust be right for you?

A VCT might be right for you if-

• You would like to get tax relief by investing in these higher-risk funds.
• You understand that you are not guaranteed a return and that your capital is at risk.
• You are interested in potentially earning higher returns by investing in companies not listed on the London Stock Exchange but are aware that they carry a high risk.

How Anstee & Co can help you with VCTs.

To understand the advantages and risks of these investments, it is wise to speak to one of our Independent Financial Advisers (IFA’s). We have advisers who are highly experienced in this field and will be happy to discuss whether these might be suitable investment vehicles for you.

VCTs should be considered a longer-term investment and may be higher-risk and more difficult to realise than other types of investments.  Past performance is not an indication of future performance. Also, the value of VCTs may fall as well as rise and you as the investors may not get back what you originally invested. The tax treatment of these investments will depend on your circumstances and may be subject to future legislative change.

If you would like to find out more why not arrange a meeting with one of our financial advisers? Our experience covers all aspects of financial planning including pensions, estate planning, investments and mortgages. The initial meeting is at our cost and is without obligation. So, why not contact us today? A meeting can be arranged at a time that is convenient for you.

Our Head Office is situated in Kettering. Additionally, our financial advisers make use of meeting rooms in-

• Bedford
• Market Harborough
• Wellingborough
• Towcester
• Northampton

There is no need to visit an office as all work can be handled remotely over the phone or using video conferencing such as Zoom.

If you have any thoughts or comments about this article, “Venture Capital Trusts. Are they suitable for you?”, then we would love to hear from you.

Finally, the information contained in this article is for information purposes only and does not constitute financial advice. Anstee & Co. is authorised and regulated by the Financial Conduct Authority (FCA).