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A venture capital trust (VCT) is a quoted company that invests in shares and securities issued by qualifying unquoted trading companies with a permanent establishment in the UK.

A subscription in eligible shares of a qualifying VCT is a tax efficient investment for the individual. He can benefit from the following tax reliefs:

1. •

   income tax relief of up to 30% on the amount invested

2. •

   income tax exemption for dividends from the VCT

3. •

   capital gains tax exemption on any gain on the sale of the VCT shares

These reliefs are considered in further detail below. The conditions for a valid investment (including the conditions which must be met by the VCT and the underlying qualifying unquoted companies) are discussed in the Venture capital trusts guidance note.

VCT may be attractive to investors who want to spread their risk by indirectly investing in a number of unquoted