Tax Relief Investing | VCTs Explained
Tax Relief Investing | VCTs Explained
Today we will discuss one of two investment products that can be used to reduce your tax liability. The first one today is called Venture Capital Trusts (VCTs).
Venture Capital Trusts (or VCTs) were introduced in the UK in 1995, and they were designed to help small businesses and start-ups get investments from investors.
As investing in Start-Ups and Small businesses is risky, the government introduced VCTs to incentivize investors to invest money in these companies by offering them significant tax advantages.
Venture Capital Trusts (or VCTs) actually work very similarly to Funds which are usually the products Pensions and Investment ISAs tend to invest in. Venture Capital Trusts (or VCTs) are listed on London Stock Exchange and pull money from investors and use that money to invest in a range of unlisted small companies.
This means when you invest in a Venture Capital Trust (or VCT) you are investing in a basket that holds several shares in various small companies. So there are diversification benefits that come with this type of product, as you're not putting all your eggs in one basket. Some companies in Venture Capital Trusts (or VCTs) will do well and some won't do so well, but overall you are hoping the group majority will see you achieve a good return on your investment. But obviously, this is not guaranteed. Fun fact, Zoopla, Graze, and Depop are some previous Venture Capital Trusts (or VCTs) companies that have succeeded and become household names.
There is a criterion for companies to be a part of a Venture Capital Trust (or VCT) and that depends on the Company Size, it must have assets of £15m or less, Its Age (7 years old or less), and how many people it employs. But it is worth noting that there are exceptions to some of these rules.
Chapter Information (Tax Relief Investing | VCTs Explained):
0:00 Introduction
0:42 What are Venture Capital Trusts (VCTs)?
1:04 How do Venture Capital Trusts Work?
2:20 VCT Tax Benefits
5:21 5-Year Rule
6:20 How to claim Tax Relief
6:47 How to Invest in a VCT?
8:33 Are VCTs worth it?
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🔹 VCTs: https://www.rjp.co.uk/the-tax-benefit...
🔹Octopus Investments: https://octopusinvestments.com/our-pr...
🔹Octopus Apollo VCT: https://octopusinvestments.com/our-pr...
🔹 Hargreaves Lansdown: https://www.hl.co.uk/investment-servi...
🔹Wealth Club: https://www.wealthclub.co.uk/venture-...
🔹Best Invest: https://www.bestinvest.co.uk/vcts
🔹 Vanguard (Charges) -https://www.vanguardinvestor.co.uk/wh...
DISCLAIMER: Any advice or statements perceived to be advice given in this video and any other videos on my channel are for information purposes only, and does not act as financial advice.
You are fully responsible for your financial decisions. If you need any Financial Advice, please seek out a professional advisor. If you are unsure of how to do this, please feel free to reach out to me and I am more than happy to guide you.
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