It is now 30 years since the Venture Capital Trust (VCT) scheme was launched, so how has it fared? Is it a feasible investment for you?
Since it started, the VCT scheme has raised £12 billion for UK start-ups, with £882 million of that in the last tax year alone. Since 2018, almost 800 businesses have benefited to the tune of nearly £2.9 billion in investments.
What is a VCT?
VCTs allow individuals to use trusts to invest in unquoted companies, providing capital to small firms. They are also an appealing tax offering, with exemption from capital gains tax and the £500 tax-free dividend limit. For investors, VCTs provide an opportunity to invest in the long-term in pioneering UK companies they might ordinarily be unable to access.
However, with startups, there is a significant level of risk involved, which means they won’t be for everyone. The VCT scheme was recently extended by a further 10 years, which means that it will be an investment option until at least 2035.
The CEO of the Association of Investment Companies, Richard Stone, has referred to VCTs as a British success story, which has led to the creation of numerous household name companies in industries from healthcare to tech, while generating many thousands of jobs and boosting economic growth.
VCTs invested over £500 million into scaling businesses in 2023 and have, to some extent, offset the loss in funding from a more sluggish wider venture capital market, at a time when some start-ups haven’t met funding objectives.
If you require financial advice in Cheshire, contact Hartey Wealth Management today to discuss your options.
