VCT (Venture Capital Trust)
UK tax glossary · Last reviewed: April 2026
Venture Capital Trusts are listed companies that invest in a portfolio of small unquoted businesses. Investors receive 30% Income Tax relief on up to £200,000 invested per tax year, provided shares are held for at least five years.
VCT dividends are exempt from Income Tax, and disposal of VCT shares is exempt from CGT. However, VCTs are illiquid relative to mainstream funds, carry high charges, and invest in inherently risky companies — the tax relief partly compensates for this.
HMRC approves VCTs; check the HMRC list before investing. VCTs are popular with high earners who have maximised pension contributions and want further tax-efficient investing.
Common questions
What happens if I sell my VCT shares before five years?
You must repay the 30% Income Tax relief. HMRC claws it back via your Self Assessment return. Hold for the full five years to retain the relief.
How do VCTs differ from EIS?
VCTs are listed funds with a portfolio of companies; EIS involves direct investment in a single company. VCTs have a 5-year holding requirement vs EIS's 3 years, and VCT relief is £200,000 vs EIS's £1 million annual limit.
Related resources
TaxHelper provides general information based on published HMRC rates and guidance. It is not regulated financial or tax advice. For decisions involving significant sums, complex circumstances, or if you are unsure, speak to a qualified accountant or HMRC directly.