Investing in a VCT is relatively straightforward, but there are two primary ways to get involved with important implications on tax benefits::
New Share Offers: VCTs raise money by issuing new shares during specific periods in each tax year. By investing in a new share offer, you’ll be eligible for the full suite of tax benefits highlighted above —provided you hold the shares for at least five years. Many investors choose this route for the tax relief alone. Shares offered through Sidekick will qualify as new shares.
Secondary Market: You can also buy VCT shares on the secondary market, but these won’t come with the same income tax relief as new shares. However, you’ll still benefit from tax-free dividends and capital gains. Listed shares acquired through various brokerage platforms qualify as secondary market shares.
It’s important to remember that investing in a VCT should be a long-term commitment, given the minimum five-year holding period required to retain the tax benefits if purchased during a new share issuance.