How can I claim
VCT tax relief?
Important information - Venture Capital Trusts (VCTs) invest in small, early-stage, unlisted companies and are considered high-risk investments. It’s difficult to access your money in the short term and their value can go down as well as up so you could get back less than you put in. VCTs are long-term investments and only really a consideration for larger portfolios. We suggest they form a small part of a diversified portfolio. This isn’t personal advice, if you’re unsure if VCTs are right for you, please consider taking advice. Tax rules can change, and their benefits depend on your individual circumstances.
When you invest in new issues of VCTs, you can claim up to 30% income tax relief, as well as benefit from tax-free dividends and no tax on capital gains. You don’t need to declare VCT dividends or capital gains on your tax return. But you will need to claim for tax relief from HMRC.
You can claim relief up to four years after the end of the tax year in which you made the investment in a VCT.
This is not tax advice and we’re not tax experts. If you’re unsure about how to complete a tax return, consider using HMRC’s guidance online or contacting them directly. Alternatively speak to your accountant.
What you need to have to hand to claim tax relief
After you’ve invested in a VCT and your shares have been allotted, you’ll be sent a VCT tax certificate. You will need this to claim your tax relief.
This can take up to 10 days and the VCT provider will send it to you by post.
You can’t claim tax relief until you’ve received your VCT tax certificate, but you don’t usually need to send it to HMRC when making a claim. You may be asked to produce it if requested, so it’s important to keep it safe.
The process of claiming tax relief will depend on whether you submit a tax return or not and if you do it online or by post.
How to claim VCT tax relief: step by step
On your online self-assessment form
When completing your return, you’ll need to look out for the “Tailor your return” section.
Then:
- Answer “Yes” to the question on other tax reliefs
- Under “Other tax reliefs and deductions” provide the total amount of all your VCT subscriptions and details of your VCT investments
On your paper tax return
When completing your return, you’ll need to download and print the “Additional information” sheet (SA101).
Then:
- In the “Other tax reliefs” section, provide the total amount of all your VCT subscriptions you’re claiming for in the part marked “Subscriptions for Venture Capital Trust shares”
- Return this sheet with your tax return
If you don’t want to wait to complete a tax return
You don’t have to wait until you complete a tax return to claim the tax relief.
You can ask HMRC to:
- Make an adjustment to your tax code if you pay tax by PAYE so you pay less tax over the rest of the tax year
- Send you a tax refund
You may need to send a copy of your P60 and a copy of your VCT tax certificate to do this.
How will the tax relief be paid?
Tax relief will reduce the amount of tax you have to pay. If you’ve already paid too much in tax, the relief could be paid by cheque or direct to a bank account.