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Venture Capital Trust (VCT)

A Venture Capital Trust (VCT) is a type of publicly listed company in the UK that provides individual investors with access to venture capital investments in small, early-stage companies. VCTs offer tax incentives to encourage investment in higher-risk businesses, including income tax relief on initial investments and tax-free dividends. VCTs pool money from investors to invest in a diversified portfolio of young companies, helping reduce the risk of individual investments.

Example

An investor purchases shares in a VCT and receives tax-free dividends from the profits generated by the fund’s investments in small, high-growth companies.

Key points

• A publicly listed company that pools investor capital to invest in small, high-growth businesses.

• Offers tax incentives, such as income tax relief and tax-free dividends.

• Aimed at providing venture capital to early-stage companies while reducing risk for individual investors.

Quick Answers to Curious Questions

Investors receive tax incentives, including income tax relief and tax-free dividends, while gaining exposure to early-stage companies.

By pooling money from multiple investors, VCTs can diversify their portfolios across a range of high-growth companies, reducing the risk associated with individual investments.

They aim to provide venture capital to small, high-growth businesses that may have difficulty accessing traditional financing.