A Venture Capital Trust is a company whose shares trade on the London stock market. A VCT aims to make money by investing in other companies. These are typically very small companies which are looking for further investment to help develop their business. 

Investments in Venture Capital Trusts carry tax relief to encourage investment in these smaller, higher risk companies. By pooling investments with those of others, VCTs allow investors to spread the risk over a number of small companies.

Tax Relief: 

• 30% Income Tax Relief (up to £60,000 due to maximum £200,000 invested).

Conditions 

• Must be listed on Stock Exchange;
• All money raised must be employed within 2 years;
• Must not retain more than 15% of income from shares or securities;
• Least 70% of value must be in qualifying shares;
• Maximum of 15% invested in a single company or group;
• At least 10% of total investment in any company must be in ordinary shares;
• A company raising money under a VCT must have fewer than 250 full time employees;
• To be a qualifying holding for a VCT, a company must have raised less than £5m under all Venture Capital schemes in the 12 month period; (£10 million for knowledge-intensive companies)

-If the limit is exceeded, none of the shares will rank as a qualifying holding for a VCT, in addition no more than £12 million can be raised during the company’s lifetime (£20 million for knowledge-intensive companies)

• The company must also satisfy a number of other conditions broadly similar to EIS companies.