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Venture Capital Trust (VCT)

What is 'Venture Capital Trust - VCT'

A type of publicly listed closed-end fund found in the United Kingdom. A venture capital trust is designed as a way for individual investors to gain access to venture capital investments via the capital markets. Its mandate is to seek out potential venture capital investments in small unlisted firms to generate higher than average risk-adjusted returns for its investors.


Numerous venture capital trusts are listed on the London Stock Exchange.

Explaining 'Venture Capital Trust - VCT'

Venture capital trusts are tax-advantaged investments in the United Kingdom, often relieving investors of many of the tax implications surrounding dividends and capital gains, or offering lower taxation rates.


Typically, they are bound by regulations to the percentage of funds that must be allocated to qualifying investments, or holdings, along with timelines for capital injection loans and investments outside of those held in said qualifying holdings. However, the majority of VCTs aim to invest a large majority of their funds with the goal of achieving higher risk-adjusted returns than other investments available in the market.


Further Reading


Short-run price performance of venture capital trust in initial public offerings
www.sciencedirect.com [PDF]
… LSIFs are expected to have higher agency costs and lower profitability than private venture capital funds … a capital gains tax liability, a 20% income tax rebate on their initial investment and no … In April 2004, the capital gains tax deferral was scrapped, while the income tax rebate …

Taxation influences upon the market in venture capital trust stocks: theory and practiceTaxation influences upon the market in venture capital trust stocks: theory and practice
www.tandfonline.com [PDF]
… LSIFs are expected to have higher agency costs and lower profitability than private venture capital funds … a capital gains tax liability, a 20% income tax rebate on their initial investment and no … In April 2004, the capital gains tax deferral was scrapped, while the income tax rebate …

Is Venture Capital Performance Affected by Recessions? Evidence from the UK Venture Capital Trust Scheme.Is Venture Capital Performance Affected by Recessions? Evidence from the UK Venture Capital Trust Scheme.
search.ebscohost.com [PDF]
… LSIFs are expected to have higher agency costs and lower profitability than private venture capital funds … a capital gains tax liability, a 20% income tax rebate on their initial investment and no … In April 2004, the capital gains tax deferral was scrapped, while the income tax rebate …

The structure, governance and performance of UK venture capital trustsThe structure, governance and performance of UK venture capital trusts
www.tandfonline.com [PDF]
… LSIFs are expected to have higher agency costs and lower profitability than private venture capital funds … a capital gains tax liability, a 20% income tax rebate on their initial investment and no … In April 2004, the capital gains tax deferral was scrapped, while the income tax rebate …

Study of the impact of Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) on company performanceStudy of the impact of Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) on company performance
ore.exeter.ac.uk [PDF]
… LSIFs are expected to have higher agency costs and lower profitability than private venture capital funds … a capital gains tax liability, a 20% income tax rebate on their initial investment and no … In April 2004, the capital gains tax deferral was scrapped, while the income tax rebate …

venture capital trust (VCT)venture capital trust (VCT)
www.elgaronline.com [PDF]
… LSIFs are expected to have higher agency costs and lower profitability than private venture capital funds … a capital gains tax liability, a 20% income tax rebate on their initial investment and no … In April 2004, the capital gains tax deferral was scrapped, while the income tax rebate …

The structure of venture capital fundsThe structure of venture capital funds
books.google.com [PDF]
… LSIFs are expected to have higher agency costs and lower profitability than private venture capital funds … a capital gains tax liability, a 20% income tax rebate on their initial investment and no … In April 2004, the capital gains tax deferral was scrapped, while the income tax rebate …

Financing entrepreneurs: Better Canadian policy for venture capitalFinancing entrepreneurs: Better Canadian policy for venture capital
search.proquest.com [PDF]
… LSIFs are expected to have higher agency costs and lower profitability than private venture capital funds … a capital gains tax liability, a 20% income tax rebate on their initial investment and no … In April 2004, the capital gains tax deferral was scrapped, while the income tax rebate …

Public venture capital: missing link or weakest link?Public venture capital: missing link or weakest link?
www.inderscienceonline.com [PDF]
… LSIFs are expected to have higher agency costs and lower profitability than private venture capital funds … a capital gains tax liability, a 20% income tax rebate on their initial investment and no … In April 2004, the capital gains tax deferral was scrapped, while the income tax rebate …



Q&A About Venture Capital Trust (VCT)


What are the tax advantages of VCTs?

They relieve investors of many of the tax implications surrounding dividends and capital gains, or offer lower taxation rates.

What is a venture capital trust?

A type of publicly listed closed-end fund found in the United Kingdom.

How do VCTs work?

Typically, they are bound by regulations to the percentage of funds that must be allocated to qualifying investments, or holdings, along with timelines for capital injection loans and investments outside of those held in said qualifying holdings. However, most VCTs aim to invest a large majority of their funds with the goal of achieving higher risk-adjusted returns than other investments available in the market.

Where can you find information about VCTs?

You can find information about them on London Stock Exchange websites.