Good VCTs can offer investors a lot more than tax breaks

TAX

Since March 2004 VCTs have benefited from 40% income tax relief. However, before buying, investors should make sure that a VCT has strong underlying investments

Investing simply on the basis of attractive tax breaks is never a good idea. Better decisions are made when they are based purely on the strength of the underlying investment and we encourage advisers to keep that rule in mind. Tax relief should be gratefully accepted but not seen as the be-all and end-all. Venture capital trusts (VCTs) are currently attracting a lot of attention thanks to their enhanced tax relief. However, they have a lot more to offer investors than simply the tax breaks. The VCT story goes back to September 1995, when the Government at the time attempted to encourage...