Highs and lows of VCTs

vcts

VCTs offer 40% income tax relief but are not suitable for older investors because in the event of a shareholder's death they are subject to inheritance tax and lose the 40% income tax relief

VCTs' closest relations are investment trusts. They are fully quoted funds of smaller company investments. Smaller is defined as a company with gross assets not exceeding £15m before investment, and not exceeding £16m immediately afterwards. The companies into which they invest 70% of their funds must carry on a trade which qualifies for tax relief - most UK based trades qualify, with a few exceptions such as financial services and property development. The remaining 30% of funds can be invested as the VCT manager wishes. Only investments offering the potential for both income and growth ...