Which benefit is specifically associated with Venture Capital Trusts (VCTs)?

Venture Capital Trusts (VCTs) offer several tax benefits, but the one specifically associated with them is the exemption from capital gains tax on the disposal of shares. This means that when an investor sells shares in a VCT, any profits made from the sale are not subject to capital gains tax, which can be a significant incentive for individuals looking to invest in higher-risk investments like those typically made by VCTs.

This feature encourages investment in small and early-stage companies, aligning with the primary objective of VCTs to foster growth in these sectors. By removing the capital gains tax liability, VCTs make it more appealing for investors to enter the venture capital market, potentially leading to increased funding for innovative businesses.

Investors should be aware of the specific conditions under which this benefit applies, including the holding period of the shares and the status of the companies in which the VCT invests. Understanding this aspect is crucial for investors considering putting capital into VCTs as part of their wealth management strategy.