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Overview of the VCT scheme and the associated tax reliefs

E3.201 VCTs—overview

A Venture Capital Trust (VCT) is an investment vehicle similar to an investment trust (see D7.332). It is designed to overcome the difficulty that some investors face in finding suitable investments that meet the conditions for relief under the Enterprise Investment Scheme (EIS) (see E3.101). An individual investor can acquire shares in the VCT, whose professional managers use the funds to make and manage investments in a range of unquoted companies (investee companies). The individual investor obtains tax reliefs, similar to those available under the EIS scheme, for the investment in the VCT¹.

The legislation governing the income tax rules for the VCT scheme is contained in ITA 2007, Pt 6 (ss 258–332). For HMRC guidance on the VCT scheme, see VCM50010–VCM58000.

A sunset clause ends VCT relief from 6 April 2035², unless this date is changed by Treasury regulations³.

Together with the Enterprise Investment Scheme, the VCT scheme constitutes a form of state aid (see below))⁴.