VCTs: A less taxing way for clients to invest

Chris Hutchinson is director at Unicorn Asset Management

VCTs

Pros and cons

Pros

• Access to smaller, unquoted companies can provide the potential for growth

• Generous tax reliefs, such as 30 per cent upfront income tax reliefs, tax-free dividends and no CGT on realised gains

Cons

• Smaller, unquoted companies are higher risk than larger, more established firms

• Minimum five-year holding period to qualify for income tax relief

• Less secondary market liquidity/wider spreads than the average investment trust