A Guide to Venture Capital Trusts (VCTs)

Date published: 19 December 2025

What is a Venture Capital Trust (VCT)?

Venture Capital Trusts (VCTs) are companies listed on the London Stock Exchange (LSE) that raise money from private investors to invest into early-stage businesses and scale-ups with strong growth potential.
‍

VCTs were introduced by the UK Government in 1995 to encourage investment into entrepreneurial companies and have since become an important source of funding for scaling businesses, which provide an outsize contribution to job creation, innovation, and productivity in the UK.

Over the three decades since its launch, the VCT scheme has grown into a cornerstone of the UK’s venture capital market. According to the Venture Capital Trust Association (VCTA) - the industry body representing VCT managers - VCTs now collectively manage more than £6.5bn across investments in over 1,000 companies, supporting more than 100,000 jobs nationwide.

What types of companies do VCTs invest in?

VCTs use the money they raise from private investors to back young, ambitious companies that are developing new products, services, and technologies. These are often some of the UK’s most innovative businesses, with the potential to scale rapidly and disrupt traditional industries.

In return, investors gain exposure to a professionally managed portfolio of these entrepreneurial companies, alongside a range of tax benefits designed to balance the higher risks of investing in early-stage businesses.

To maintain these tax benefits, VCTs must ensure that a high proportion of their assets are invested in companies that meet qualification criteria set by the UK Government. These include:
‍

They must be relatively small – typically with gross assets of no more than £15m* and with fewer than 250 employees at the time of investment.
They must be relatively young – usually less than seven years old.
Their shares must not be quoted on a recognised stock exchange (such as the main market of the LSE), although companies listed on the Alternative Investment Market (AIM) may qualify. They must also be independent and not controlled by another company.

As an example, the ProVen VCTs were the first institutional investors in Monica Vinader, the British jewellery brand, in 2010. Their initial investment enabled the opening of the first Monica Vinader store on South Molton Street in 2011. Thirteen years later, when the ProVen VCTs fully exited in 2023, the business had grown into an international brand selling in more than 70 countries, with a team of over 350 people, and sales exceeding £100m. It’s a clear illustration of how VCT backing can help a small business scale into a global success story.

Please note that past performance is no guarantee of future results.

Why invest in VCTs?

Unlike companies listed on public markets, investments in early-stage businesses and scale-ups can be hard to access and difficult to analyse due to a relative lack of trading history and data. They can, however, drive returns for investors through their growth and expansion.

VCTs provide immediate access to a professionally managed, diversified portfolio of investments in companies that have been identified for their potential to scale, removing many of the barriers to accessing these types of investments for private investors.

The Government also chooses to mitigate some of the risks of backing earlier stage, higher risk investments through providing investors with attractive tax reliefs**, including:
‍

30% income tax relief on new shares (up to £200,000 per investor, per tax year) in the tax year of investment (forfeited if the shares are sold within five years). From 6 April 2026, the initial tax relief will reduce to 20%.*
Tax-free dividends.
No capital gains tax on the sale of VCT shares.

Who are VCTs suitable for?

VCTs are considered higher-risk investments and are generally more appropriate for experienced investors with larger, diversified portfolios. They may be particularly suitable for individuals who:
‍

Have already maximised their pension and ISA allowances.
Are higher or additional rate taxpayers seeking tax-efficient options.
Can commit to holding shares for the medium to long term.

For most people, VCTs will make up only a small proportion of an overall portfolio.

Investors should seek advice from a regulated financial adviser before deciding to invest in a VCT, to ensure the investment is appropriate for their individual circumstances.

What are the risks of investing in VCTs?

As with all investments, there are risks to consider, and investors should review a VCT’s prospectus and Key Information Document before investing. The key risks include:
‍

Capital at risk, you may lose part or all of your investment.
VCT tax reliefs are subject to change, possibly retrospectively. Income tax relief is only available to UK taxpayers, on amounts invested up to a maximum of £200,000 per person, per tax year, and is restricted to the amount which reduces the investor’s income tax liability to nil.
VCTs should be considered as a long-term investment. If you sell your investment within 5 years, you will have to repay the initial income tax relief.
VCTs invest in smaller companies which may fall or rise in value much more sharply than shares in larger, more established companies. They may also be harder to sell.

What are the types of VCTs?

There are three different types of VCTs – Generalist, AIM, and Specialist.
‍

Generalist VCTs, such as the ProVen VCTs, are the most common ones. They invest in a range of sectors, rather than focusing on a particular one, aiming to minimise risk through diversification.
AIM VCTs invest in shares issued by AIM (the LSE’s market for small and medium size growth companies)-quoted companies.
Specialist VCTs tend to focus on only one sector, such as healthcare or software.

As VCTs are companies listed on the LSE, they must comply with the listing regulations. These include publishing annual reports, appointing independent directors, holding shareholder meetings (including AGMs), and adhering to regulatory standards.

In summary

Venture Capital Trusts offer a mix of growth potential, diversification and attractive tax incentives, but they also carry meaningful risks that need careful consideration. For experienced investors who can take a long-term view, VCTs could provide access to some of the UK’s most dynamic young companies. These businesses shape new markets, create jobs and drive innovation across the economy. As part of a broader personal investment strategy, VCTs can support tax-efficient investing while helping to fuel the next generation of British success stories.

To learn more about how the ProVen VCTs support ambitious UK businesses, please visit the following page:

ProVen VCTs

* In the Autumn Budget 2025, the Government announced changes to VCTs taking effect from 6 April 2026, including an increase in the qualifying company gross asset limit from £15m to £30m and a reduction in income tax relief for new VCT subscriptions from 30% to 20%.

** Subject to investors meeting certain conditions. Tax relief is only payable to UK tax payers, on amounts invested up to a maximum of £200,000 per person, per tax year, and is restricted to the amount which reduces the investor’s income tax liability to nil.

Important notice: issued by Beringea LLP of Charter House, 55 Drury Lane, London, England WC2B 5SQ, registered in England & Wales number OC342919 and authorised and regulated by the Financial Conduct Authority, number 496358. This material is for information only and does not constitute an offer to buy or sell an investment nor does it solicit any such invitation. The information contained in this guide is believed to be accurate at the date of publication, but no representation or warranty stated or implied is made or given by any person as to its accuracy or completeness and no responsibility or liability is accepted for any such information or opinion. It is not our intention to offer legal, tax or investment advice, and we always recommend that investors seek professional advice that can take account of their personal circumstances before making any investment.

Get in touch

The ProVen products are managed by Beringea, a specialist award-winning venture capital firm. If you have any questions, you can contact us at:

020 7845 7820 | info@beringea.co.uk

020 7845 7820
info@beringea.co.uk

Preferences

Privacy is important to us, so you have the option of disabling certain types of storage that may not be necessary for the basic functioning of the website. Blocking categories may impact your experience on the website. More information

Thank you! Your submission has been received!

Oops! Something went wrong while submitting the form.

A Guide to 
Venture Capital Trusts (VCTs)

What is a Venture Capital Trust (VCT)?