VCT, EIS and SEIS

This section provides an analysis of the tax reliefs afforded by Venture Capital Trusts and the Enterprise Investment Scheme, and highlights the important differences between the two schemes.

These schemes provide considerable tax reliefs, although, as ever, professional advice must be sought before making investments that qualify for these reliefs.

A Venture Capital Trust (VCT) is an investment company broadly similar to an investment trust. It will be quoted on a regulated market and will have to invest at least 70% of its assets in companies that would qualify under the EIS, and must distribute most of its income by way of dividend. It must be able to demonstrate a spread of investments: none can account for more than 15% of the value of its portfolio. There are other conditions for VCTs.
The EIS is a government scheme that allows certain tax reliefs for investors who subscribe for qualifying shares in qualifying industries.
The SEIS is similar to the EIS except that this is targeted at investors who subscribe for shares in early stage companies where the risk is often greater.
The reliefs for Venture Capital Trusts, the Enterprise Investment Scheme and the Seed Enterprise Investment Scheme are similar in many respects, but there are some significant differences.