Introducing Venture Capital Trusts Part One – What are the tax breaks?


Originally published at:
This is the first in a series of articles on venture capital trusts, an investment vehicle designed for those who want to invest in growth stocks whilst having the comfort of having a professional manager doing the hard work for them. We shall start off by looking at the tax breaks on offer. But first……


Really well thought out and researched article.

I had never considered the benefits of buying VCTs second hand, in fact I had to look some of this information up because I thought @satwaki_chanda had got it wrong but he is right.

I don’t know why this isn’t covered or talked about so much by the VCT plan managers because one of the things that has put me off in the past is sagging share prices for listed VCTs. Making investors aware of the potential benefits of buying already listed VCTs should be in interest of the companies promoting them.


I was aware of the dividend advantages of buying in the secondary market but it’s useful to be reminded of the advantage of picking it up on a discount.

A very useful and comprehensive piece I shall bookmark for future use.


Thank you very much for liking this article. Though @casper I would be mortified if I had got something wrong, as all my articles are written with the legislation in front of me. If only you could see it for yourself!

Yes, that bit about the discount - I confess I didn’t really cotton on to it till I came across that discussion on the Motley Fool boards. Actually at that time, I think the discounts on a lot of private equity/property trusts were higher at even 60% plus. One private equity trust was effectively on a discount of 90% if you took into account its cash balances.

But it does serve to illustrate what the point of tax breaks are really about. Not just in the world of VCT investment, but anywhere else. They’re not just about reducing your tax bill. They also effectively the cost of your investment. And as we know, reducing the cost helps boost your rate of return.

So it stands to reason that if you have a discount on the VCT shares, you can easily achieve the same result by buying secondhand.