VCTs are one of the most tax efficient Investments available if you are prepared for the increased risks. The funds are usually invested in small, unquoted firms at an early stage or in shares listed on the Alternative Investment Market (AIM).
These are deemed to be high risk investments however the reward is that they offer 30% tax relief on initial input, tax free income on dividends and no capital gains tax on subsequent sale.
VCTs are specialised Investments and we would recommend taking advice before investing due to the added risk regarding potential liquidity issues and also by the very nature of the underlying Investments.
These schemes are government incentives to increase investments in small unlisted companies. The EIS tax advantages on offer are as such:
As with VCTs, EISs are deemed high risk due to liquidity risk and also the underlying Investments.