The Great Debate UK
-Rachel Mason is public relations manager at independent financial service providers Fair Investment Company. The opinions expressed are her own. -
Investing in start-ups can be risky, but vital for a healthy economy, so in 1995, Venture Capital Trusts were introduced by the government to encourage people to invest in small, growing UK companies.
To counter the risks involved, the government made VCTs attractive by offering 30 percent up front tax relief on investments of up to 200,000 pounds each tax year, they also made the dividends on VCTs free from income tax and capital gains tax, and any gains from the sale of VCTs free from capital gains tax.
This meant that many investors started putting their money into VCTs, giving small businesses in the UK a boost and giving themselves a nice tax break on their investments.