Buying, Selling and Keeping VCTs Modest Money1 Comment

Mike Piddock, Business Line Manager for Venture Capital Trusts at Octopus Investments, explains what investors should look for when they’re choosing a VCT.

The amount of money flowing into Venture Capital Trusts (VCTs) has been rising steadily in recent years, as more investors take advantage of the generous tax benefits they offer. The government gives these incentives to reward you for investing in smaller companies that create jobs and growth for the country’s economy.

You can claim 30% upfront income tax relief on your VCT investment, as long as you hold on to it for five years, any dividends you receive from your VCT will also be tax-free, and you won’t have to pay any capital gains tax if you sell your VCT shares at a profit. A key point to remember is that the income tax relief is only available on VCT shares when they are first issued by the VCT – if you buy your shares second-hand from another investor, you won’t qualify.

Choosing your VCT

All VCTs invest in relatively small businesses. As long as you’re comfortable with the fact that you face more risk with smaller companies than with larger ones, your next decision will be what sort of…

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