How the VCT sector is maturing

On the radar of small-cap fund managers

Changes to pension legislation are driving high earners to look at other ways of investing in a tax-efficient manner.

Venture capital trusts (VCTs) can be an attractive option, providing 30% upfront income tax relief on investment, tax-free dividends and no tax to pay on realised gains.   These schemes are high risk and not suitable for all individuals, although they should not be dismissed as 'tax-efficient ways of losing money as some investors have labelled them. As the market has matured, VCTs have grown in size and a number now exceed £100m in net assets, which is comparable to many mainstream funds. Moreover, while VCTs can only invest in fledgling companies, established VCTs have built port...