What are VCTs?

The UK Government first introduced Venture Capital Trusts (VCT's) in 1995 as a way of encouraging individuals to invest in a diversified portfolio of smaller, unquoted companies trading wholly or mainly in the UK. In addition to the potential returns offered by investing in such companies, VCTs provide eligible investors with significant tax benefits.

Facts about VCTs

• VCTs invest in a portfolio of small, UK based companies with the potential for much more rapid growth than larger, quoted companies.

• Although individually, small companies generally have a higher risk profile than larger ones, investing in a broad portfolio of different businesses reduces the overall level of risk of a VCT.

• An extensive range of tax-related benefits enhance the returns achieved by VCT.

• VCTs offer investors the prospect of an attractive stream of tax-free dividends.

• Private equity has historically generated much higher returns than investment in quoted markets.