What are Venture Capital Trusts (VCTs)?
A Venture Capital Trusts is a quoted company that investments in a portfolio of UNQUOTED EIS companies. The theory being that a portfolio of investments will be LOWER than a single EIS investment.
To encourage investors to provide funding for EIS companies through VCTs there are INCOME TAX and CAPITAL GAINS tax reliefs available.
INCOME TAX RELIEF (VCT)
INCOME TAX RELIEF = AMOUNT SUBSCRIBED FOR x 30%
THE RELIEF is in the form of a TAX REDUCTION to the INCOME TAX LIABILITY.
The MAXIMUM annual VCT investment is £200,000.
The MAXIMUM annual tax reducer is therefore £60,000.
The INCOME TAX RELIEF is WITHDRAWN if the individual does not hold the shares for a mininum of 5 years.
DIVIDEND INCOME for investments up to £200,000 per annum are EXEMPT.
CAPITAL GAINS TAX RELIEF (VCT)
CAPITAL GAINS on disposing of shares in a VCT are EXEMPT for investments up to £200,000.
CAPITAL LOSSES are NOT allowable.