This year marks the 25th anniversary of the introduction of Venture Capital Trusts (VCTs). Introduced by the government to stimulate investment into smaller UK companies, they now have assets of over £6 billion invested. Since 1995, VCTs have offered an attractive way for investors to gain exposure to, and support, smaller companies that are not listed on the main market of the London Stock Exchange.
There are many benefits associated with investment into VCTs for investors, particularly those looking for tax relief and growth on their investments, which we explore below:
- Income Tax Relief - Investors can claim income tax relief at the rate of 30 per cent of up to £200,000 annual investment, provided their shares are held for at least five years.
- Capital Gains Relief (CGT) - No CGT is payable on disposals by individuals of ordinary shares in VCTs.
- Dividends – No income tax is payable on dividends from ordinary shares in VCTs.
When considering a VCT for your client’s portfolio, a further benefit includes using the long-term, tax-efficient investment to compliment pensions and ISAs during planning for income in retirement. For further information on planning ideas, you will find lots of helpful tips on our Adviser Centre. It is also worth considering the challenge investors will face with VCTs; they are not open all-year round and demand often outweighs supply, so being proactive is a must to reap the rewards.
Following on from the Foresight Williams Technology EIS Fund, Foresight and Williams Advanced Engineering have collaborated again to provide a VCT option, investing into the same type of businesses as the successful EIS Fund. The new share class sits within the long-established and successful Foresight Solar & Technology VCT. The unique partnership brings together an experienced investment manager with a 35-year track record of fund raising, investing in, structuring and exiting SMEs with a renowned technology and engineering business.
The VCT offer provides investors with an opportunity to invest in a portfolio of early-stage companies with high growth potential, developing transformational technologies across a range of sectors, with all the associated benefits of a VCT wrapper. Recent investments from the sister Foresight Williams Technology EIS fund include Open Bionics, an award-winning designer and manufacturer of next generation bionic limbs and Refeyn, an Oxford University spin-out developing a new generation of scientific instrumentation with the potential to transform the biopharma sector.
The launch comes in response to demands from financial intermediaries who believe there is a strong appetite from private investors who value the simplicity of the VCT structure.
To learn more about the Foresight Williams Technology VCT Share Class, click here.
The value of an investment can fall as well as rise. Investments in smaller unquoted companies are higher risk than investments in larger quoted companies. Investors may not get back the full amount they invest.
Past performance is not a reliable indicator of future results.
We recommend investors seek professional advice before deciding to invest. Foresight is not able to offer investment advice.
Tax reliefs are dependent on the VCT maintaining its qualifying status and on investors’ individual circumstances.