What is a key tax wrapper feature of a VCT?

The exemption from income tax on dividends is a key feature of a Venture Capital Trust (VCT). This means that individuals receiving dividends from VCT investments do not have to pay income tax on that income, which can significantly enhance the attractiveness of VCTs as an investment vehicle. This tax relief is designed to encourage investment in smaller, higher-risk companies in the UK, aligning with the broader goal of promoting business growth and innovation.

Investors benefit from this tax wrapper feature as it allows them to take full advantage of any income generated by the VCT without the burden of additional taxation, making it a compelling option for those looking to invest in venture capital opportunities. Additionally, the income tax exemption on dividends can lead to higher net returns compared to other forms of investment that do not offer similar tax-efficient benefits.