"Investing in a VCT can provide generous tax relief of up to 30% to those who invest. This is the government’s way of encouraging VCTs and so providing tax relief as a benefit by HMRC to investors."
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Advantages of Venture Capital Trusts
VCTs create jobs and provide economic growth, and thus the government enthusiastically back these schemes.
VCTs allow for small businesses to grow and succeed in a way that they wouldn’t be able to without this funding.
Investing in a VCT can provide generous tax relief of up to 30% to those who invest. This is the government’s way of encouraging VCTs and so providing tax relief as a benefit by HMRC to investors.
Profits are paid to VCT investors as tax-free VCT dividends.
The value of the tax benefits does depend on individual circumstances of both the investor and the company.
In order to make it easier to sell VCTs back after the minimum five year tax period, VCT managers often periodically offer to buy the shares of the company back from the investor at a better price than it was sold to them (although this is not guaranteed).
VCTs are less risky than EIS investments as EISs are less liquid and less diversified as VCT investments (as EIS investments only offer access to 5-10 unquoted companies as opposed to VCTs access to 30-70 companies).