Why Should Investors Consider VCTs?

If you’re looking to take a more adventurous approach to investing, it may be worth looking into a Venture Capital Trust (VCT).

What is a VCT?

VCT’s are trusts that give investors the opportunity to support smaller, newer businesses.

These types of investments can help to boost these businesses to help them reach their goals, all while enabling you to save on tax liability. They work in similar ways to an investment trust, except they focus on businesses that are at the start of their journey.

Because VCTs invest in start-ups and businesses in an early stage rather than mature companies, they are likely to appeal to those who are adopting a more adventurous approach to investing. This is why if you’re considering investing in a VCT it is important to speak to a local financial adviser beforehand. This is so they are able to guide you through the process and adapt to your attitude to risk.

How can they benefit me?

VCTs can help you reduce tax liability by allowing investors to claim up to 30% income tax relief on investments of up to £200,000 per year. In order to do this, investors must keep the shares for a minimum of 5 years.

VCTs also spread investments across multiple companies, helping to mitigate some of the risk that comes with investing in smaller and less mature businesses. It’s important to understand that the benefits of these investments do not come without risk, so always talk to a financial adviser before looking into one.

What next?

If you’re interested in finding out more about the benefits of investing in VCTs and their impact on reducing income tax, talk to our financial advice team. Please call us on 01926 492406 or email us at enquiries@klofinancialservices.com to make an appointment.