What is Venture Capital Trust? UK Definition 2026/27
Quick Answer
Quoted fund investing in small companies with 30% income tax relief on investments.
Definition of Venture Capital Trust
A Venture Capital Trust (VCT) is a listed company that invests in small, unquoted UK businesses. Investing in new VCT shares gives 30% income tax relief (up to £200,000/year), tax-free dividends, and tax-free capital gains. Shares must be held for 5 years to keep the income tax relief. Unlike EIS/SEIS, VCTs are diversified funds.
Venture Capital Trust — Key Facts for 2026/27
| Income tax relief | 30% |
| Annual limit | £200,000 |
| Minimum holding | 5 years |
| Dividends | Tax-free |
How Venture Capital Trust Works — Example
- 1Investment: £100,000
- 2Income tax relief (30%): £30,000
- 3Effective cost: £70,000
- 4Annual tax-free dividend (5%): £5,000
- 5Dividend on £70,000 effective cost: 7.1% yield
How Venture Capital Trust Affects Your Tax
VCTs offer attractive tax reliefs with professional management and diversification. Theyre lower risk than direct EIS/SEIS but still invest in small, higher-risk companies. The 5-year holding requirement needs consideration.
Official HMRC Guidance on Venture Capital Trust
For official guidance, refer to HMRC's documentation. Tax rules can change, so always verify current rates and thresholds on gov.uk.
HMRC: VCT tax reliefFrequently Asked Questions about Venture Capital Trust
Related Tax Terms
Accuracy Note
This information is for guidance only and is based on 2026/27 tax year rates. Tax rules are complex and your circumstances may differ. For personal advice, consult a qualified accountant or tax adviser.