Get your tax benefits with caution

vcts

VCTs will benefit from 40% income tax relief until April 2006, but it is still not advisable to put more than 10% of a portfolio in these investments.

Venture capital trusts (VCTs) are investment companies whose shares are traded on the London Stock Exchange. They were launched by the Government in 1995 to persuade private investors to put money into a portfolio of small companies without a main stock market listing, which needed finance to start trading or expand. The incentive for investors was substantial tax benefits. The Government wanted investment in small and medium sized enterprises (SMEs), which employ more than 50% of the private sector workforce, because of a shortage of venture capital funding to support their growth. This e...