Being higher-risk investments, VCTs and EISs should only be considered suitable for those investors wealthy enough to make them part of a wider investment portfolio, and comfortable with investing for a minimum three years for EIS and five years for VCTs. While at the riskier end of the investment spectrum, the VCT sector is entering its third decade and has very much come of age. Generalist VCT managers have become much more experienced at controlling risks through picking high-quality investee companies and helping them succeed. Investors are rewarded not just financially, but also with the gratification of knowing they are backing small British companies, which play a key role in reinventing and growing the UK economy.
Will Fraser Allen is deputy managing partner at Albion Ventures
Key Points
VCTs and EISs are not as well-known as they probably should be, given their very preferential tax treatment.
Both VCTs and EISs benefit from an income tax rebate equal to 30 per cent of the initial investment.
Being higher-risk investments, VCTs and EISs should only be considered suitable as part of a wider investment portfolio.
