Why are investors increasingly attracted to VCTs?

Introduction

Notwithstanding challenging conditions for markets and investors, it is clear from our conversations with shareholders and financial advisers that the appetite for new VCT offers remains buoyant. VCTs are increasingly forming a key part of their financial and portfolio planning, where the attractive tax benefits available, including up to 30% initial tax relief, are complemented by the chance to support the SME sector and its contribution to the wider economic success of the UK.

In this video Bill Nixon, Managing Partner at Maven Capital Partners, breaks down the main attractions of VCTs and why they are becoming popular amongst UK investors.

Transcript

Bill Nixon: The reason VCTs have become more attractive in recent years is essentially twofold. First of all, the product is now long established and proven. It has delivered many years of positive investor returns.

Investors have the opportunity to subscribe for shares with 30% initial tax relief, as well as enjoying tax free dividends. Additionally, pension legislation has changed in recent years, limiting how much individual investors can commit in one year to the pension and also limiting the maximum size of a pension pot. With that in mind, many investors have looked towards VCTs as a replacement product to provide a source of income, particularly in retirement.

But there is more to VCTs than simply the tax breaks. Research from the AIC shows that investors enjoy backing young emerging companies before they become widely known. The type of companies being supported by the Maven VCTs. Additionally changes in consumer behaviour provide a fantastic platform for smaller businesses, particularly in such a fast changing world, and VCTs are well placed to take advantage of that.

We back companies in a wide range of high growth sectors, including software, healthcare, data analytics, training, cybersecurity and many others.