Fund managers raise capital annually in order to invest in UK-based, smaller companies to help them grow and develop. Each VCT will have its own underlying companies at different stages of the business’s life cycle. Often, VCTs will have a theme or thematic approach to the companies they hold and manage. The VCT fund managers target high growth as well as regular dividend yields.

VCTs vary in size but classically your funds would be invested across 60-120 underlying investments.

Due to the nature of VCTs investing in smaller UK companies, there’s a higher risk attached to some underlying companies failing to grow. However, VCT fund managers tend to specialise in identifying early-stage businesses with high growth potential that can have the ability to be sold for a multiple of the purchase value.

VCT fund managers often sit on the board of the underlying companies to provide experience and guidance.

When considering the initial tax benefits, tax-free dividends and tax-free disposals, VCTs certainly have a place as part of a diversified, wealth management strategy.

The main qualifying conditions for a VCT company to be eligible for relief are as follows:

• A VCT must not be a close company (a company in which the directors control more than half the voting shares, or where such control is exercised by five or fewer directors and their associates).
• VCT shares must be listed on a regulated market.
• In general, the VCT should not invest in a company whose trade is more than seven years old (ten years for a ‘knowledge-intensiveʼ company).

The VCT itself must derive its income wholly or mainly from shares and securities, and not retain more than 15% of the income from shares and securities.

• At least 80% (since 6 April 2019) by value of its investments must be in qualifying holdings of shares or securities throughout the accounting period. These companies should be privately owned or AIM listed with investment used for the company’s organic growth and development.
• No single holding can represent more than 15% of the value of the VCT at the time of investment, so the minimum holdings within a VCT must be at least seven.

A company in which a VCT invests must not have gross assets valued in excess of £15 million and must have fewer than 250 full-time employees.

No, VCTs are not covered by the FSCS. They are considered high-risk investments by the Financial Conduct Authority (FCA).

A leading UK wealth management and employee benefits provider with multiple offices nationwide, Mattioli Woods manages over £16 billion in assets for over 16,000 clients. We specialise in integrated financial planning, combining investment and tax strategies with personalised service built on longstanding relationships.

Our expertise spans self-invested personal pensions (SIPPs), small self-administered schemes (SSASs), ISAs, trust planning, and discretionary portfolio management (DPM). We offer tailored employee benefits solutions to help businesses attract and retain top talent. While we prioritise our own DPM, SIPP and SSAS products (providing ‘restricted advice’), we’ll recommend alternative solutions when needed, supported by rigorous research.

Understanding you is vital to our approach, whatever your goals. That’s why our experienced financial advisers will work with you to learn what is important to you. We will put together a holistic financial strategy so we can work towards your financial – and life – goals.

To ensure your strategy remains up to date, we meet with you regularly to review, discuss and refine your plan.

We build long-term wealth through our structured, institutional approach to investment management, selecting quality investments across different asset types, such as shares and bonds, at fair prices. We tailor diversified portfolios to your risk preferences while our size and scale secures better fees and implementation, ensuring your money works for you.

We carefully monitor where your money is invested across different sectors, countries, and markets. We test how our portfolios might perform in difficult market conditions and ensure investments match your chosen risk level, staying within acceptable fluctuation limits. Although VCTs are typically illiquid and may require a long-term commitment with limited opportunities to sell or exit investments before a predetermined holding period expires.

Quite simply, you! Our clients are the successful individual, the business owner, the investor, the family money, the high-net-worth-individual and the sophisticated investor.

They recognise the value of partnering with trusted financial advisers like ourselves, who can deliver holistic financial strategies to preserve and grow their assets.

We believe a refined approach is required with wealth management, one that is bespoke to your complex financial objectives and long-term goals.

You will receive a highly-qualified wealth management consultant – backed by a team of client relationship managers – who will take the time to understand your family and business dynamics, walk through your long-term goals and create a holistic solution tailored to your needs.

Together with your VCT provider we will manage after your portfolio, ensuring you will receive monthly performance fact sheets to keep you up to date on how your investments are progressing.