Venture capital trusts

A venture capital trust (VCT) is a quoted company that invests in shares and securities issued by qualifying unquoted trading companies with a permanent establishment in the UK.

A subscription in eligible shares of a qualifying VCT is a tax efficient investment for the individual. He can benefit from the following tax reliefs:

• •income tax relief of up to 30% on the amount invested
• •income tax exemption for dividends from the VCT
• •capital gains tax exemption on any gain on the sale of the VCT shares

These reliefs are considered in further detail in the Venture capital trusts income tax relief guidance note. The conditions for a valid investment are discussed below.

VCTs are attractive to investors who want to spread their risk by indirectly investing in a number of unquoted companies rather than investing direct in one company, as in the enterprise investment scheme. For more on that scheme, see the Enterprise investment scheme ― introduction guidance note.

Note that a sunset clause for VCT income tax relief has been introduced. This ensures that income tax relief will no longer be given to subscriptions made on or after 6 April 2025, unless the legislation is renewed by Treasury Order.

To obtain the income tax relief on investment in a VCT, the investor must meet all the following conditions: