What is a Venture Capital Trust?
Venture Capital Trusts (VCTs) were introduced in 1995 and are designed to encourage individuals to invest indirectly in a range of small higher-risk trading companies using a listed Investment Trust structure.
Ingenious VCTs offer the following benefits:
- Attractive expected returns and consistent annual tax-free dividends
- 30% income tax relief
- 5-year liquidity strategy
In addition, any gain realised by an investor on the sale of shares in a VCT is not subject to Capital Gains Tax and as an Investment Trust, the VCT itself does not pay Corporation Tax on any gains arising on the disposal of underlying VCT investments.
What are the VCT Tax Reliefs?
Qualifying investors will receive 30% upfront tax relief on their investment provided that the shares are held for at least five years. In addition, dividends and gains on the disposal of shares are exempt from taxation under current legislation.
How can I obtain the tax relief?
Each VCT will issue each shareholder with a tax certificate which should be used to claim the 30% income tax relief. Individuals can claim their relief either by obtaining an adjustment to their PAYE tax code by ringing their local tax office or through self assessment.
Dividends received on shares acquired in VCTs (on investments up to £200,000 per tax year) are not required to be shown on a shareholder’s self assessment tax return.
What is the annual limit for subscriptions to VCTs?
There is no annual limit for subscriptions to VCTs however income tax relief can only be obtained on a maximum investment of £200,000 in any single tax year. Spouses each have their own maximum investment limit of £200,000 for any one tax year.
What dividends are paid by Ingenious VCTs?
The VCTs aim to deliver target annual dividends of 5 – 7p which represents a running gross equivalent yield of 14-20% on a net cost on investment of 70 pence.
How risky are VCTs?
VCTs should be seen as longer term investments and may be higher risk and more difficult to realise than investing in other securities listed in the Official List of the UK Listing Authority and admitted to trading on the London Stock Exchange. VCTs are designed to provide capital for small companies and each VCT will invest in several companies.
As such, there is a risk that these companies may not perform as hoped and in some circumstances may fail completely. Although every step is taken to protect our shareholders from risk it is advised that individuals consider carefully their appetite for risk and their ability to engage in long term 5 year investments such as VCTs before making an investment.
How does Ingenious mitigate risk for investors in the Entertainment VCT?
The following strategies are utilised by the Entertainment VCTs at all times in order to mitigate risk:
- Each VCT invests in a range of companies in order to spread risk for our investors.
- Each investee company will engage the services of an experienced producer or promoter with a proven track record in bringing media projects to market. Investments are made when the fund manager is confident that those involved are capable of delivering the returns targeted by the Entertainment VCTs.
- All Ingenious investments are managed by a dedicated and experienced team who select each project carefully against strict investment criteria. All investments are monitored and managed on a daily basis by the team to drive commercial success and mitigate risk.
- Each investee company will be required, where appropriate, to obtain relevant insurance policies in order to protect themselves against normal industry risks.
Why invest in the Live and Entertainment Sectors?
Despite a challenging economic environment in 2009 UK live music revenues increased by 9.4% to £1.5bn and now exceed recorded music earnings [PRS Music Industry Report 2010].
Ingenious Entertainment VCTs are currently focusing on the live sector in order to take advantage of several complimentary trends in this area. These include the increase of live revenues across the sector in reaction to changing consumer habits and changing trends in the advertising industry as companies seek new ways to engage audiences. Finally technological advances have also created enhanced opportunities for live and entertainment platforms making this sector a very promising investment opportunity.
What does Ingenious look for before recommending an investment to a VCT?
The Manager is one of the UK's leading media investment specialists and has proven experience of successfully structuring, promoting and managing investment opportunities across the media and entertainment industries. The Manager enjoys deep industry relationships and contacts and applies its considerable experience to assess the content and growth opportunities of each particular project. Investments are only ever made when the Manager is confident the project is capable of delivering the returns targeted by the Entertainment VCTs.
Nothing on this website or the documents contained constitutes investment, tax, legal or other advice by Ingenious Media Investments Limited or Ingenious Ventures (a trading name of Ingenious Capital Management Limited). An investor should seek advice about their own personal financial position in relation to entitlement to tax reliefs.