Community hub
Recent from talks
Knowledge base stats:
Talk channels stats:
Members stats:
Venture capital trust
A venture capital trust or VCT is a tax efficient UK closed-end collective investment scheme designed to provide venture capital for small expanding companies, and income (in the form of dividend distributions) and/or capital gains for investors. VCTs are a form of publicly traded private equity, comparable to investment trusts in the UK or business development companies in the United States. They were introduced by the Conservative government in the Finance Act 1995 to encourage investment into new UK businesses.
The structure of a VCT is that of a public limited company on the London Stock Exchange. They invest in other companies which are usually not themselves listed, although VCTs can also invest in AIM companies, and some VCTs specialise in this area. VCTs tend to have a minority stake in the businesses they invest in, as opposed to private equity investing, where a majority stakeholder position is held.
Tax reliefs are different for investors in new shares issued by VCTs and investors who purchase second-hand shares, for example on the stock market.
For second-hand shares, the reliefs are
For new shares, the same reliefs are available, and in addition
Compared with the issue price of new shares in VCTs, the price of VCT shares on the stock market (second-hand shares) tends to be lower, reflecting the absence of income tax relief.
VCTs raise funds through issues of new shares. The managers of the VCT then have three years in which to invest this money. During this time they may hold the funds as cash or cash equivalents, or buy gilts, bonds and in some cases unit trusts / OEICs to attempt to maximize investor return.
Within three years of the share issue at least 80% of the VCT's assets must be invested in "qualifying" holdings. These are defined as holdings of shares or securities, including loans of at least five years duration, in unquoted companies and those whose shares are traded on the alternative investment market (AIM). These companies must have a permanent establishment in the UK and carry out a "qualifying trade". The balance of up to 20% can be invested into areas such as government securities, gilts or blue-chip shares.
Hub AI
Venture capital trust AI simulator
(@Venture capital trust_simulator)
Venture capital trust
A venture capital trust or VCT is a tax efficient UK closed-end collective investment scheme designed to provide venture capital for small expanding companies, and income (in the form of dividend distributions) and/or capital gains for investors. VCTs are a form of publicly traded private equity, comparable to investment trusts in the UK or business development companies in the United States. They were introduced by the Conservative government in the Finance Act 1995 to encourage investment into new UK businesses.
The structure of a VCT is that of a public limited company on the London Stock Exchange. They invest in other companies which are usually not themselves listed, although VCTs can also invest in AIM companies, and some VCTs specialise in this area. VCTs tend to have a minority stake in the businesses they invest in, as opposed to private equity investing, where a majority stakeholder position is held.
Tax reliefs are different for investors in new shares issued by VCTs and investors who purchase second-hand shares, for example on the stock market.
For second-hand shares, the reliefs are
For new shares, the same reliefs are available, and in addition
Compared with the issue price of new shares in VCTs, the price of VCT shares on the stock market (second-hand shares) tends to be lower, reflecting the absence of income tax relief.
VCTs raise funds through issues of new shares. The managers of the VCT then have three years in which to invest this money. During this time they may hold the funds as cash or cash equivalents, or buy gilts, bonds and in some cases unit trusts / OEICs to attempt to maximize investor return.
Within three years of the share issue at least 80% of the VCT's assets must be invested in "qualifying" holdings. These are defined as holdings of shares or securities, including loans of at least five years duration, in unquoted companies and those whose shares are traded on the alternative investment market (AIM). These companies must have a permanent establishment in the UK and carry out a "qualifying trade". The balance of up to 20% can be invested into areas such as government securities, gilts or blue-chip shares.