Venture Capital Trust Investments

VCTs are generally aimed at experienced investors who are comfortable taking on higher levels of risk in exchange for the potential of higher returns, alongside tax reliefs. They may be suitable for clients who have maximised other tax-efficient allowances (such as Individual Savings Accounts (ISA) and pensions) and are seeking long-term exposure to smaller, UK-based companies. Clients should be prepared to hold the investment for at least five years to retain income tax relief, and they should understand that capital is at risk.

VCTs can support objectives such as supplementing retirement income through tax-free dividends, reducing an income tax bill via up-front relief, or diversifying a portfolio by adding exposure to early-stage, potential high-growth companies. They may also appeal to clients who want their investment to support UK entrepreneurship. The primary aim should be capital growth and/or income over the long term, with the understanding that VCT performance can be volatile.

Because VCTs invest in small, often unquoted or AIM-listed companies, they carry higher risks, including the potential for significant loss of capital. Advisers should consider the client’s capacity for loss, investment experience, time horizon, and broader portfolio composition.

VCTs offer exposure to a segment of the market — early-stage and growth-focused UK businesses — that is not typically available through mainstream equity or bond funds. This can help broaden diversification by adding a higher-risk, potentially higher-return asset class. For suitable clients, this may balance a portfolio’s overall risk-return profile, though allocations should be considered in the context of the client’s total investment strategy and tolerance for volatility.

Octopus VCTs back a wide range of UK-based companies across sectors such as technology, healthcare, consumer goods, and renewable energy. While each VCT has its own investment mandate, the focus is typically on companies with strong growth potential, experienced management teams, and scalable business models. These may include both early-stage ventures and more established businesses seeking expansion capital.

Octopus offers a range of adviser support materials, including client-friendly brochures, factsheets, and suitability guides, as well as regular webinars and market updates. Our investment teams provide quarterly reports and portfolio updates to help advisers track performance and communicate with clients. In addition, our dedicated Business Development Managers are available to discuss individual cases, answer technical queries, and provide training on VCT suitability and positioning. Our VCT Academy is designed for advisers, offering tools and resources to help you better understand VCTs and put you in the best position to recommend them to your clients.