A Venture Capital Trust (VCT) is a tax-efficient way to invest in early-stage UK businesses with high-growth potential. It offers investors Income Tax relief, the opportunity for tax-free growth and the potential for tax-free dividend payments - though these are not guaranteed. 

This page answers some of the most common questions advisers ask about Venture Capital Trusts (VCTs), from tax relief and dividend treatment to share certificates and buyback policies.
 

When can my client claim tax relief on their investment?

Clients can claim up to 30% Income Tax relief (20% from 6 April 2026) on a qualifying VCT investment of up to £200,000 per tax year, in the tax year the shares are allotted. To retain this relief, the shares must be held for a minimum of five years. It’s the date of share allotment, not the date of application or payment, that determines the relevant tax year.

If a client chooses to reinvest their VCT dividends, this is treated as a new investment for tax purposes. The reinvested amount will be used to purchase new shares, which will be allotted separately and may fall into a different tax year.

Can clients claim income tax relief on the rebate?

Yes, clients can claim tax relief on a rebate. 
 

Do reinvested VCT dividends count as a new VCT investment?

Yes. VCT dividends that are reinvested do count as a new investment for tax purposes. 
 

Do the rebate shares have the same start date as the initial purchase or does the 5-year clock start on the new date these were reinvested?

Rebate shares are treated as a new investment for tax purposes. This means the five-year holding period starts from the date the rebate shares are issued.
 

What is the 6-month rule for VCT?

The six-month rule prevents investors from claiming Income Tax relief on new shares up to the value of shares disposed of in the same VCT within six months.
 

What are the different options for claiming Income Tax back if I’m self-employed, a company director, or an employee?

PAYE investors can claim via SA101 or request a tax code adjustment. Self-employed investors claim through their Self-Assessment tax return.
 

Are VCT dividends taxable?

VCT dividends are tax-free in the UK, and gains are exempt from Capital Gains Tax. 
 

Can I change my dividend preference?

Investors can reinvest all, part, or none of their dividend via Blackfinch’s FlexiDRIS scheme.
 

What would the reference be on my client’s bank statement when dividends are paid?

Bank statements show a shortened VCT name, the word ‘Dividend’, and the payment date.

If you can’t find the answer you’re looking for, or would like to discuss a specific client scenario, please get in touch with your local Business Development Manager. You can find their contact details here.