A Venture Capital Trust (VCT) is an investment company, broadly similar to an investment trust, which has been approved by HMRC. Investors subscribe for shares in the VCT and this money, after fees have been deducted, is pooled and used by the fund manager to invest in or lend money to small unquoted companies, including companies that are listed on AIM or ISDX. There are complex rules with which a VCT must comply that are designed to channel investments into small companies with certain characteristics, known as qualifying companies. For example, in most cases they must have less than 250 employees and gross assets of less than £15 million. Most of the companies are registered in the UK.

By virtue of the size of the qualifying companies, investments in them (known as qualifying investments) carry greater risk than those made in larger companies, although they also have the potential to deliver significant capital growth over the medium to long term. To encourage investment into VCT schemes, the government has put in place a number of incentives in the form of income tax relief, dividend tax relief and capital gains tax relief.  The income tax relief is only available on new shares issued by the VCT, whilst the dividend tax relief and the capital gains tax relief is available on new VCT shares and existing VCT shares bought through the London Stock Exchange.

The VCT shares themselves are quoted on the London Stock Exchange Main Market and can therefore be bought and sold at any time, although an investor will lose some or all of their tax reliefs if they sell their shares before the fifth anniversary of their issue.


The Alternative Investment Market, otherwise known as AIM, is the London Stock Exchange’s equity market for smaller, growing businesses. It is a deep and diverse market that is home to over 1000 companies operating across 40 sectors and in 90 jurisdictions.

Small companies list on AIM to gain access to new capital, provide liquidity for their shareholders and enhance their reputation through their status as a plc. AIM companies have to abide by the rules set out in the AIM rule book, which is often said to be a lighter touch regime than the listing rules that apply to companies on the Official List. AIM companies are sponsored by a nominated adviser (NOMAD), whose role it is to ensure the AIM rules are correctly applied, and make use of a broker to provide them with corporate and investor access and as a source of published research. In many cases, AIM companies appoint the same company as their Broker and NOMAD.


Below is a summary of the benefits, which are based on current tax legislation and are subject to change at any time. The tax reliefs are available to investors over the age of 18 who pay UK income tax; they are dependent on the individual circumstances of the investor.
  • Income tax relief of 30% of the sum invested, subject to a maximum investment of £200,000 in any tax year. Relief is limited to the amount which reduces the investor’s income tax liability to nil and is only available on shares issued through an offer; it is not available on shares purchased through the London Stock Exchange.
  • Tax-free dividends, which may include capital distributions.
  • Capital gains tax exemption on the disposal of ordinary shares in a VCT.

Example effect of initial income tax relief

  • Cost of investment 100p
  • Cost of investment net of tax relief 70p
  • Initial net asset Value 97p
  • Initial uplift (%) 39%

Investors who hold their VCT shares for less than 5 years may have to repay some or all of their 30% initial income relief.   


Below is a summary of the key risks associated with this offer for subscription. A more comprehensive list of the risk factors can be found in the prospectus which should be read in full by investors considering a subscription.

  • Risks specific to the VCTs. The VCTs will invest in small high risk companies. These qualifying companies may have volatile share prices and the investments may be difficult to realise. They may be overly reliant on a few large customers and have less financial resilience. They may also have weak or negative cash flow and less management resource.
  • Legislative risk. Changes in legislation may adversely affect the funds’ status as VCTs and their ability to meet their investment objectives and/or reduce the level of achievable return.
  • Risks to the tax reliefs. There can be no guarantee that the VCTs will meet their objectives or that suitable investment opportunities will be identified. A failure to maintain the qualifying status could result in the VCTs losing the tax reliefs previously obtained, resulting in adverse tax consequences for investors. Investors who sell their VCT shares before the fifth anniversary of the share issue are likely to have to repay their income tax relief. Therefore, an investment in a VCT should be seen as a long term investment.
  • Risks that relate to VCT shares. VCT shares can be difficult to sell as there can be little demand for VCT shares sold through the London Stock Exchange. Furthermore the share price is unlikely to reflect the net asset value per share. Both VCTs operate a credible share buy-back policy but the Directors reserve the right to amend or suspend the application of the buyback policy. Dividend distributions are subject to performance and other factors and cannot be guaranteed. The past performance of the VCTs and their underlying investments is no indicator of future performance. Investors may not get back the amount they originally invested.


We are aware that the Hargreave Hale brand name and logo are being used fraudulently, in an attempt to engage and exploit unsuspecting investors. In some cases the Hargreave Hale logo and our office address are being used to give the impression that this fraudulent activity is genuine.

Should you receive an unsolicited call or written communication from any party purporting to represent Hargreave Hale, we ask you not to respond.

We would ask that you call our main administration office in Blackpool on 01253 754700 where your call will be directed to our fraud officer.

We also advise that anyone who receives unexpected emails, promoting ‘offers and services’ not to respond and avoid opening any links contain within these emails. Irrespective of the method of contact, you should avoid divulging personal details, credentials or any other types of confidential information to a fraudster.

This warning also applies to anyone who has invested in the Hargreave Hale AIM VCTs and who is contacted regarding the sale of their shares at an inflated price.