Like the enterprise investment scheme (EIS), the venture capital trust (VCT) regime is designed to encourage investment in smaller, higher-risk trading companies. A VCT is a company (not a trust), approved by HMRC, whose shares are admitted to trading in such a way that they meet the listing condition explained in Practice Note: VCTs—VCT conditions for HMRC approval—The listing condition. Individuals can benefit from a range of tax reliefs, and spread their investment risk, by subscribing for (or, in the case of some of those reliefs, buying) shares in a VCT, which, in turn, subscribes for newly issued shares or debt in unquoted companies (companies listed on AIM are unquoted for these purposes).

For full details of these reliefs (and the conditions that must be met by the individual investor and their investment in VCT shares), see Practice Note: VCTs—introduction to regime and description of tax reliefs. In summary, the principal tax reliefs are:

1. •

   investment income tax relief at 30% of the amount subscribed for new non-redeemable, non-preferential ordinary shares in a VCT, up to the annual