Venture Capital Trusts Scheme

The Venture Capital Trusts (VCT) scheme has been designed to encourage individuals to invest in small, usually high risk trading companies.

The VCT scheme is similar to the Enterprise Investment Scheme (EIS) which also offers tax breaks for investors. Both of these schemes are designed to encourage private individuals to invest in smaller usually high risk companies.

The VCT scheme offers investor’s Income Tax relief of 30% on new subscriptions for ordinary shares in VCTs. The maximum amount qualifying for relief is £200,000 in each tax year. Dividends received from VCTs are exempt from Income Tax, provided the shares acquired (by subscription or purchase) are within the annual limit of £200,000 and held for 5 years. Shares in VCTs acquired within the annual limit are also exempt from CGT on disposal at any time, but losses on disposal are not allowable as capital losses.

New statistics on the use of the scheme in 2023-24 have been published. The headline points are as follows:

• VCTs issued shares to the value of £873 million in 2023-24, which is a 17% decrease in comparison to the 2022-23 figure of £1,051 million
• The number of VCTs raising funds has remained consistent in the 2023-24 tax year
• The number of VCTs managing funds has increased by 2, to 51 in the tax year 2023-24
• In 2023-24, Venture Capital Trust (VCT) investors claimed Income Tax (IT) relief on £810 million of investment. This is a decrease of 19% from 2022-23
• The number of VCT investors who claimed Income Tax relief has decreased by 9% to 24,085 in 2023-24.

Our friendly Business and Tax Advisory experts are here to support you every step of the step of the way. Give them a call on 01380 723692 or email us here.