Many companies that started off with VCT funding have become household names in their own right. Some have listed on the London Stock Exchange, while others have been sold to global brands, such as Microsoft and Twitter, delivering excellent returns for VCT investors. And of course, VCTs offer several tax incentives to help compensate investors for the risk they take with their money.

For more information, take a look at the Octopus guide to Venture Capital Trusts.

Octopus Titan VCT

The UK’s largest VCT invests in entrepreneurial early-stage companies with the potential for high growth.

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Octopus AIM VCTs

Two VCTs featuring established portfolios of around 70 AIM-listed companies with growth potential.

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Octopus Apollo VCT

A portfolio of around 25 established smaller companies which targets regular tax-free dividends for investors.

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Award-winning support for advisers

Our goal is to set the standard in supporting advisers with a range of materials to help your conversations with clients. Get in touch with your local Business Development Manager to see:

  • Client tax planning scenarios and case studies
  • Comprehensive information to help with your due diligence
  • Educational materials explaining how VCTs can complement retirement planning strategies, which can also be found on our adviser academy

We also host regular tax-planning workshops, webinars and other events. Find out more >>>

Why invest in a VCT?

Growth potential: VCTs can offer an attractive way to gain exposure to smaller companies that are not listed on the main market of the London Stock Exchange. However, investing in VCT-qualifying companies means VCTs are high-risk investments, and investors may not get back the full amount they invest.

Tax incentives: When investors purchase new VCT shares, they’re entitled to claim a number of tax incentives on investments up to £200,000 each year:

  • Up to 30% income tax relief on the amount invested: For a £10,000 VCT investment, £3,000 can be taken off the investor’s income tax bill – provided shares are held for at least five years and the amount of income tax claimed doesn’t exceed the amount of income tax due. 
  • Tax-free capital gains: If VCT shares are sold for a profit, the proceeds won’t be liable for capital gains tax.
  • Tax-free dividends: VCT dividends don’t need to be declared on a tax return.

Diversification: Smaller companies often follow a different investment cycle from other parts of the market, so VCTs can help to add useful diversification to an overall investment portfolio.

Supporting British innovation: Investing in a VCT means helping innovative, fast-growing smaller companies to create jobs, prosperity and economic growth.

Complementing other investments: A VCT can be a useful option for investors looking to complement existing pension plans or other long-term investments, such as ISAs.

Additional income: Tax-free VCT dividends can provide an attractive supplementary income, especially for investors approaching or in retirement.

What risks should your clients be aware of?

Investors could lose their money
There’s no guarantee that the amount invested (an investor’s capital) will be returned. So an investor may not get back the full amount invested.

A VCT is a long-term investment
Investors should be prepared to hold shares for a minimum of five years. If they decide to sell their shares before then, they will be required to repay to HM Revenue & Customs any upfront income tax relief they’ve claimed.

A VCT should be considered a high-risk investment
VCTs invests in the shares of companies that are not listed on the main market of the London Stock Exchange. Such investments can fall or rise in value much more sharply than shares in larger, more established companies. They can also take longer and be more difficult to sell. If your clients aren’t comfortable with the risks involved with unlisted companies, this investment may not be right for them.

Shares may be difficult to sell
There isn’t an active market for VCT shares in the way there is for shares in big companies like BP and Vodafone. This means that if an investor decides to sell their VCT shares, they may not be able to find a buyer, or they may have to accept a price lower than the net asset value of the investment.

Past performance is no guide to the future
The past performance of an investment is not a reliable indicator of future results. Nor should investors rely on any forecasts made about future returns.

Tax rules can change
Rates of tax, tax benefits and tax allowances do change. In addition, the tax benefits available to investors through this investment depend on an investor’s own personal circumstances. To ensure VCT money continues to support Government policy objectives, HM Treasury can also change the definition of a VCT-qualifying investment in the future. This could impact the nature of new investments a VCT can make over time.

The VCT’s qualifying status could end
If a VCT loses its qualifying status, tax advantages – such as tax-free dividends and exemption from capital gains tax – may be withdrawn from that point. If this happens within five years of an initial investment, investors may be asked to repay any upfront income tax relief that they have already claimed.

Octopus VCT 3 shareholder information

Octopus VCT 3 plc aims to provide investors with tax-efficient access to a portfolio of companies with growth potential, targeting a tax-free dividend stream, through a combination of regular and special dividend payments. Octopus VCT 3 is now closed for new investment.

What are the risks?
We recommend you seek independent advice before investing. Our products place your capital at risk and you may get back less than you invest. It’s really important to us that you understand the risks which come with investing in our products. Please read through the risks in the dropdown menu above.

Follow this link to view the latest Octopus VCT 3 announcements and share prices from the London Stock Exchange

London Stock Exchange code: OCV3
Registrars: Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU
Tel: 0871 664 0324 (calls cost 10p per minute plus network extras)
Auditors: James Cowper Kreston 
Registered in England: No. 07744056
Registered office: 33 Holborn, London, EC1N 2HT

Latest AGM Results
Latest AGM results document

Latest annual report
Octopus VCT 3 annual report 31 August 2016

Latest interim report

Octopus VCT 3 interim report 29 February 2016

For further documentation please see the document library.

Date: 29 Feb 2016
Current net asset value: 78.1p
Cumulative tax-free dividends paid: 15p

The NAV is the combined value of all the assets owned by the VCT after deducting the value of any liabilities (such as debts and financial obligations).

Dividend history
12 Feb 2014 5p
13 Feb 2015 5p
12 Feb 2016 5p

Octopus VCT 4 shareholder information

Octopus VCT 4 plc aims to provide investors with tax-efficient access to a portfolio of companies with growth potential, targeting a tax-free dividend stream, through a combination of regular and special dividend payments. Octopus VCT 4 is now closed for new investment.

What are the risks?
We recommend you seek independent advice before investing. Our products place your capital at risk and you may get back less than you invest. It’s really important to us that you understand the risks which come with investing in our products. Please read through the risks in the dropdown menu above.

Follow this link to view the latest Octopus VCT 4 announcements and share prices from the London Stock Exchange

London Stock Exchange code: OCV4
Registrars: Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU
Tel: 0871 664 0324 (calls cost 10p per minute plus network extras)
Auditors: James Cowper Kreston 
Registered in England: No. 07743878
Registered office: 33 Holborn, London, EC1N 2HT

Latest AGM Results
Latest AGM results document

Latest annual report
Octopus VCT 4 annual report 31 August 2016

Latest interim report

Octopus VCT 4 interim report 29 February 2016

For further documentation please see the document library.

Date: 30 Apr 2016
Current net asset value: 78.1p
Cumulative tax-free dividends paid: 15p

The NAV is the combined value of all the assets owned by the VCT after deducting the value of any liabilities (such as debts and financial obligations).

Dividend history
12 Feb 2014 5p
13 Feb 2015 5p
12 Feb 2016 5p

Important information

Our products will place your clients’ capital at risk, so they could get back less than their original investment. Tax treatment depends on your clients’ personal circumstances and can change. Tax reliefs depend on the portfolio companies maintaining their qualifying status. Before deciding to invest, your clients must understand all of the risks and read all product literature carefully.

Nothing on this page constitutes investment, tax or legal advice. VCTs may not be suitable for everyone, so we recommend investors speak to a financial adviser. Any recommendation should be based on a holistic review of your client’s financial situation, objectives and needs.