Venture Capital Trusts

Access attractive tax reliefs as an incentive to take on the risk of backing early-stage businesses

Octopus Investments is the largest provider of Venture Capital Trusts (VCTs) in the market. We launched our first VCT in 2002, and now manage over £1 billion across our range of products.

The UK has a rich ecosystem of early-stage businesses with untapped potential. But without funding and specialist support, many might never get off the ground. Enter VCTs. They channel capital into some of the most promising businesses to help drive their growth.

Some household names started off with VCT funding. You might have heard of some names Octopus has backed, like Secret Escapes, Zoopla, or Graze. Of course, not every smaller company will be a success story. That’s why VCTs are known for their tax reliefs. They exist to incentivise investment and to compensate investors for the risks involved in backing early-stage businesses. Please see risks below

Reasons to invest

Income tax relief

Investors can claim upfront tax relief equal to 30% of their investment on the first £200,000 per annum invested. Dividends and capital gains are also tax-free.

Tax-free dividends

The tax-free dividends paid by a VCT can provide a supplementary income, which could be useful, especially if investors are approaching or in retirement.

Support UK growth businesses

Investing in a VCT means investors are helping innovative smaller companies to create jobs, prosperity and economic growth across the UK.

Portfolio diversification

VCTs can help diversify an investor’s overall portfolio by giving them access to companies they may not otherwise hold.

Risks to bear in mind

Capital at risk

The value of a VCT investment, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest.

Tax treatment may change

Tax treatment depends on individual circumstances and may change in the future. Tax reliefs depend on the VCT maintaining its qualifying status.

Five-year minimum holding period

Investors need to hold shares for a minimum of five years. If you decide to sell your shares before then, you will be required to repay to HM Revenue & Customs (HMRC) any upfront income tax relief you’ve claimed.

Volatility and liquidity

VCTs invest in smaller companies that are often not listed on the main market of the London Stock Exchange. Investments in smaller companies can fall or rise in value much more sharply than shares in larger, more established companies. They can also be harder to sell.

Learn more about VCTs

A VCT is a listed company that invests in the shares of small, early-stage businesses.

Read our guide to VCTs

Our introductory guide explains how VCTs work, the types of companies they invest in, and the benefits and risks investors need to know.

Watch our video introduction

Familiarise yourself with the basics of VCTs .

The Tax Planning Show

Watch this webinar as we take you through some potential scenarios- everything from a client surrendering an investment bond, to a client with a buy-to-let portfolio.

Who could benefit from VCTs?

VCTs provide a tax efficient investment opportunity for those looking to invest in the shares of smaller companies.

Boiler room scams

Octopus VCT shareholders should be aware of third party scammers who claim to be Octopus or connected to our VCTs in some way.

VCTs from Octopus

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