Here’s a quick look at some of the key benefits VCTs offer:
30% Income Tax Relief: One of the biggest draws of VCTs is the ability to claim up to 30% upfront income tax relief on investments of up to £200,000 per tax year. This means you can claim up to £60,000 in income tax relief per year. However, to keep this benefit, you need to hold your VCT shares for at least five years and you need to have bought the shares during a new share issuanc
Tax-Free Dividends: Any dividends paid by VCTs are completely tax-free. This makes them especially attractive if you’re looking for a way to generate additional, tax-efficient income from your investment
No Capital Gains Tax: If the value of your VCT shares increases and you sell them after five years, you won’t have to pay any capital gains tax.
The combination of tax-free dividends and CGT exemption makes VCTs a highly tax-efficient option for investor
While these tax incentives are appealing, it’s important to remember that they are subject to certain conditions—and VCT investments come with a higher level of risk. These tax reliefs are offered to compensate investors for the higher risks that VCTs present.