A boost for VCTs

VCTs

Although 61% of VCTs are below cost on a total return basis when the 40% tax relief is added in investors have only made losses on 6% of these vehicles

The Chancellor Gordon Brown increased the level of income tax relief on venture capital trusts' (VCTs) subscriptions from 20% to 40% for the 2004/05 and 2005/06 tax years. This generous temporary boost for the VCT industry came about as small and medium sized businesses were finding it difficult to access the finance they needed to innovate, invest and grow. It will finish on 5 April 2006 and the rate of income tax relief will revert to 20%, unless there is a reprieve in the March 2006 Budget. VCTs are investment companies whose shares are traded on the London Stock Exchange. They invest ...