Venture Capital Trusts
Venture Capital Trusts (VCTs) were created in 1995 to boost investment in smaller unquoted companies, there is now a good length of track record with a wide disparity in returns. The tax incentives are generous and of particular interest for investors liable to higher rates of Income Tax who are seeking an income.
Time to act now on VCTs
Uncertainty around the continuation of UK tax reliefs for Venture Capital Trusts has driven several funds to announce large fundraises early this year. In her latest blog post, Sophie Kennedy, EQ Head of Research, explains what is driving these changes and why offers may close earlier than usual in 2017.
Who are VCTs designed for?
VCTs are not a suitable option for everyone, but can be appropriate for experienced investors who are willing to take on a degree of risk within a diversified portfolio. We consider them to be a complementary option for investors who:
- are Higher Rate (40%) or Additional Rate (45%) Income Tax payers
- wish to supplement their portfolio having fully contributed to both their pension and ISA
- currently own a diversified portfolio and are willing to invest in an inherently risky asset class, with the added incentive of tax breaks
- are comfortable with a long holding period
- are resident in the UK
EQ has put together an introductory guide to Venture Capital Trusts which is available to download for free:
Selected VCT offersThe following Venture Capital Trusts are open for investment:
|* Includes any discount offered by the promoter.|
|Name||EQ review||Offer type||Closing dates||Raised / sought||Min. investment||EQ discount*|
|Calculus VCT||Top-up||3 April 2018
31 July 2018
|£1.6m / £5.0m||£5,000||2.35%||View offer|
|Calculus VCT is raising £5m via a top-up, to be invested in mature and profitable companies.|
|Elderstreet Draper Esprit VCT||Top-up||29 September 2017||£3.6m / £10.0m||£6,000||2.5%||View offer|
|Elderstreet Draper Espirit VCT is an established generalist VCT having launched in 1998, co-managed by Elderstreet & Draper Espirit, who took a stake in Elderstreet Investments in November 2016.|
|Foresight 4 VCT||Top-up||5 April 2018
30 April 2018
|£18.0m / £50.0m||£3,000||New Investor 3.0%
Existing Investor 3.5%
|Foresight 4 VCT is a generalist VCT, investing across a broad range of sectors. It has recently merged with Foresight 3 VCT.|
|Hargreave Hale AIM VCT 1||Top-up||5 April 2018
31 Jan 2019
|£18.5m / £30.0m||£5,000||1%||View offer|
|Hargreave Hale AIM VCT 1 plc has issued a prospectus in relation to its intended merger with Hargreave Hale AIM VCT 2 plc and to raise an additional £20 million with an over-allotment facility for a further £10 million.|
|Maven Income & Growth VCT 4||Top-up||3 April 2018
20 April 2018
|£19.6m / £20.0m||£5,000||2.5%||View offer|
|Two generalist VCTs following a relatively more conservative investment approach, focused on established companies.|
|Pembroke VCT (B Share)||Top-up||5 April 2018||£4.3m / £20.0m||£3,000||3%||View offer|
|Pembroke VCT B Share sits within Oakley Investment Management, a private equity specialist. The VCT is generalist, investing in companies with a focus on consumer brands.|
|Puma VCT 13||New VCT||5 April 2018||£8.9m / £45.0m||£5,000||1%||View offer|
|A new limited life VCT managed by an experienced team with a focus on capital preservation.|
How to invest
If you want to benefit from 30% initial tax relief you must subscribe for new VCT shares via a public offer. You can download the prospectus and application forms using the links above.
The information set out above is included for information purposes only and is not an offer or an invitation to buy or sell or a solicitation of an offer or invitation to buy or sell or enter into any agreement with respect to any security, product, service or investment. Any opinions expressed do not constitute investment advice and independent advice should be sought where appropriate. All information is current as of the date of publication, subject to change without notice, and may become outdated over time. Links to third party sites or pages are for information purposes only and such sites and pages are not part of this website or the responsibility of EQ Investors Limited and have not have been reviewed or verified by EQ Investors Limited. Following links to or from any other sites or pages shall be at your own risk. Please note that tax rates and bases can change without notice.
VCTs should be considered to be high risk investments suitable only for experienced investors who can afford to incur losses.