Clubfinance can arrange your Venture Capital Trust ('VCT') investment on an execution-only basis. Arranging your VCT investment through Clubfinance, you will receive:

• 100% rebate of Clubfinance's initial commissions (where possible as additional shares);
  PLUS

• 75% rebate of all renewal (trail) commissions paid to Clubfinance.

CLICK HERE FOR A LIST OF OPEN VCTs & OUR DISCOUNTS

The Government offers tax breaks for individuals investing in small high-risk companies through various Venture Capital Schemes, including the Enterprise Investment Scheme (EIS) and the Venture Capital Trust (VCT) scheme.

VCTs are higher risk investments and may only be suitable as long-term investments. VCTs purchased from 6 April 2006 must be held for 5 years to avoid loss of income tax relief (see tax notes below). Clubfinance Ltd. offers an execution-only service; Clubfinance does not give advice or recommendations, and does not assess the appropriateness of an investment for the investor. If you have any doubts as to the suitability of a particular VCT, the agreement underlying it, or VCTs in general, or you require advice of any kind, you should contact another appropriate firm that does give advice and/or assesses appropriateness.

The Financial Services Authority has produced some Consumer Information on VCTs – please click here to access this information on their website.
 

Contents

         What is a VCT?

         Risk Warnings

         Tax notes

         How to invest - the process

         Performance and prices of existing VCTs

         Contact Form

         Open VCTs showing our discounts
 

What is a VCT?

EIS & VCT e-mail updates

To subscribe to our EIS & VCT e-mail update service please use the following form. Our e-mails will let you know when we have added new EIS and VCT investments to our website.

Venture Capital Trusts are designed to encourage individuals to invest indirectly in a range of small higher-risk trading companies whose shares and securities are not listed on a recognised stock exchange, although they can be AIM (Alternative Investment Market) listed. So, if you invest in a VCT, you spread the investment risk over a number of companies. There is a risk that these companies may not perform as hoped and in some circumstances they may fail completely. Recent budget changes have reduced the maximum size of company that VCTs can invest in, meaning that VCT shares issued now may carry a higher risk than those issued in the past.

VCTs must be approved by HM Revenue & Customs, and to gain approval they, must meet and continue to meet certain conditions. This approval enables investors to qualify for certain tax reliefs, but does not guarantee the safety or success of any investments you make in a VCT. If you invest in them you may be entitled to various income tax and capital gains tax reliefs, and VCTs are exempt from corporation tax on any gains arising on the disposal of their investments.

VCTs must invest 70% of their funds in UK companies with gross assets of no more than £7 million and fewer than 50 full-time employees (or their equivalents). To be qualifying, there is also a £2 million limit on the total amount that can be invested in a single company under the various venture capital schemes (including investments by VCTs). If the VCT does not invest 70% in qualifying investments after three years, the initial tax breaks can be withdrawn. They can invest the remaining 30% in other ways from cash deposits through to riskier investments, including derivatives.

Investors can subscribe for, or buy, shares in VCTs, which are companies listed on the London Stock Exchange, and are similar to investment trusts. They are run by fund managers who may be members of larger investment groups. VCTs realise their investments and make new ones from time to time. Generally, VCTs are considered to be long-term investments.

Being listed shares, you can buy and sell VCT shares in the ‘second-hand’ market. However income tax relief only applies if you buy a VCT through a new issue. The secondary market for shares in VCTs is limited and as a result, shares in VCTs can trade at a discount to their net asset value. To partially address this issue, some VCT Managers offer a 'Buy Back' facility normally at a discount to the net asset value. However, these Buy-Back facilities can be withdrawn. You can also buy second-hand VCT shares through a VCT portfolio service where a manager buys a selection of VCT shares for you in the secondary market. There will be additional fees and charges for this service in addition to the underlying costs on the individual VCTs.

As with any asset-based investment, the value of a VCT depends on the performance of the underlying assets. The value of the investment and the dividend stream can rise and fall. So you may get back less than you originally invested, even taking into account the tax breaks. The capital you invest is at risk, so you could lose your entire investment.

VCTs carry initial charges and costs together with annual costs, charges and fees, some of which may be performance related. These can be complex. Please refer to the Prospectuses / Securities Notes of the VCTs you are interested in for details. The levels of charges for VCTs may be greater than Unit Trusts and Open Ended Investment Companies.

Risk Warnings

VCTs are higher risk investments and are generally considered to be long-term investments. Clubfinance Ltd. offers an execution-only service; Clubfinance does not give advice or recommendations. VCTs are complex products and are not suitable for all investors. If you have any doubts as to the suitability of a particular VCT, or VCTs in general, or you require advice of any kind, you should seek a personal recommendation from a professional adviser. Do not invest in a VCT unless you have carefully thought about whether you can afford it and whether it is right for you.

Please refer also to the risk warnings and other information contained within the Prospectus or other offer document for the VCT that you have chosen, together with Clubfinance’s Terms of Business. Make sure you understand the risks and benefits before investing.

General

• As high risk investments, VCTs may only be suitable for wealthier investors as part of a diversified investment portfolio.

• If a VCT does not reach its minimum investment level, it may decide not to go ahead and return your application. Near the end of the tax year, there may not be time to invest in a different VCT. (This is less likely for ‘top-up’ issues to existing VCTs.)

• When considering an investment in new VCT shares via a top-up issue, it may be cheaper to buy shares already in issue on the secondary market even with income tax relief.

• The VCT may not be able to invest as quickly as hoped. This may reduce the return on your investment and the investment may lose its VCT status.

• Payments of renewal commission (if any) to Clubfinance Ltd. and the corresponding commission rebates to you are conditional upon you continuing to hold the shares, and may cease if Clubfinance is no longer your agent, or you transfer the shares to a nominee account.

• Past performance is not a reliable indicator of future results.

Underlying investments

• VCTs invest in small companies and each VCT will invest in a number of these, typically early stage, young companies. There is a risk that these companies may not perform as hoped and in some circumstances they may fail completely. Small companies have a higher failure rate than large established companies.

• Investments in these small companies will generally not be publicly traded or freely marketable and may therefore be difficult to sell. There will be a big difference between the buying price and the selling price of these investments. The price may change quickly and it may go down as well as up.

• Recent budgets have reduced the size of company that qualifies for VCT investment purposes. This may mean that current VCT issues are more risky than those of previous years.

• VCTs are allowed to invest some of their money in investments that don’t qualify as small companies under the VCT rules. Whilst some VCTs invest in cash-based investments, others invest in more risky investment vehicles which may raise their overall risk profile.

• Individual VCTs may use, or be able to use gearing (borrowing money to invest) or derivatives. This strategy may result in:

  • movements in the price of the VCT’s shares being more volatile than the movements in the price of underlying investments;

  • the investment being subject to sudden and large falls in value; and

  • you getting back nothing at all if there is a sufficiently large fall in value in the investment.

• Smaller VCTs may invest in fewer companies than larger VCTs, resulting in higher risk. Similarly, investing in a single VCT may be more risky than spreading your investment between more than one VCT.

• Investment strategies vary between VCTs, so some are riskier than others.

Long-term investment

• VCTs are a long-term investment. This reflects the 5-year holding period to retain tax relief, the limited secondary market for VCT shares and the nature of the investment. It can take some time for investments in smaller companies to perform and for the VCT to realise the returns on its investments

Taxation

• VCTs are subject to special tax considerations. Please refer to the individual VCT Prospectus or other offer document for a taxation summary and the taxation consequences for investors generally. However, please be warned that:

  • taxation levels, bases and reliefs can change;

  • the summary will be based on assumed rates of taxation;

  • the reliefs stated will be the ones which currently apply; and

  • taxation levels, bases and reliefs depend upon your individual circumstances.
     

• If certain criteria are not met, for example, if you do not hold the investment for five years or if the VCT does not invest enough of its funds in qualifying investments within the time allowed, the tax breaks can be withdrawn and you will have to repay any tax relief given.

• Changes in tax or other legislation may adversely affect the value of a VCT.

• Income tax relief cannot exceed your income tax liability.

• If you are unsure about your tax situation, you should seek professional advice.

Charges & performance fees

• The levels of charges for VCTs may be greater than for other investments, such as Unit Trusts and Open Ended Investment Companies.

• Some initial charges will reduce your initial investment. Other upfront and ongoing costs, fees and charges will be paid by the VCT and will reduce the value of your investment. These may include performance fees.

• Some costs borne by the VCT will be fixed in nature. If a VCT is smaller than expected these fixed costs will have a greater impact on performance.

Security of capital

• As with any asset-backed investment, the value of a VCT depends on the performance of the underlying assets, so you may get back less than you originally invested, even taking into account the tax breaks.

• VCTs are investments that can fluctuate in value. In addition, the income distributions from VCTs (if any) can also fluctuate.

• VCT investments may be subject to sudden and large falls in value, you could get back nothing at all.

Limited secondary market

• VCTs are listed shares and following issue can be bought and sold like other shares. However, this secondary market is limited - this may make VCT shares hard to sell. To partially address this issue, some VCT managers offer a buy-back facility, normally at a discount to the net asset value. Buy-back facilities can be withdrawn.

• As income tax relief is only available on newly issued VCT shares, demand for ‘second-hand’ shares may be lower.

• You may have difficulty selling this investment at a reasonable price and, in some circumstances, it may be difficult to sell it at any price.

• Shares in a VCT may trade at a discount (below the value) of the underlying assets held by the VCT.

• There is a restricted market for VCTs, and it may therefore be difficult to deal in a VCT’s shares, or to obtain reliable information about its value.

Tax Notes

VCTs carry certain tax advantages. Below is a brief summary of some of the major points relating to VCT shares purchased in the current tax year 2008/09. For more information please see the HM Revenue & Customs website and the product documentation for your chosen VCT. See the March 2008 budget release from HM Revenue & Customs by clicking here.

• VCTs must meet certain conditions to be approved by HM Revenue & Customs including that at least 70% (by value) of the total assets must be 'qualifying' after three years.

• If a VCT ceases to have approval as a VCT all tax advantages will be lost.

• For the current tax year 2008/09 income tax relief at 30% is available on investment in VCTs of up to £200,000 to be set against any income tax liability that is due, whether at the lower, basic or higher rate, but relief will be limited to the amount that reduces the investor's income tax liability to nil.

• To qualify for income tax relief, the shares must be new ordinary shares and must meet certain other conditions to be eligible. You can get this relief for the tax year in which these eligible shares were issued to you, subject to certain conditions including that you hold them for at least five years.

• Dividends from ordinary shares in VCTs are exempt from income tax for both newly issued and second-hand shares.

• Disposals of ordinary shares in VCTs (both newly issued and second-hand) are exempt from CGT (Capital Gains Tax) on gains.

• Current tax rules can change at any time.

VCT Portfolio Services

A VCT Portfolio Service provides the investor with a discretionary managed portfolio which invests in VCT shares purchased in the secondary market. The portfolio manager selects and manages the investments in your portfolio, in line with the objectives and principles for the service.

The portfolio service will have charges, which may include initial and ongoing fees and charges, and a performance fee. These are in addition to the costs and charges on the underlying VCTs themselves.

Since the VCT portfolio service currently available invests in second-hand VCT shares, the investment will not qualify for income tax relief, although the dividends paid by the VCTs are still exempt from income tax.

How to invest - the process

Documents you need to read and retain can be accessed by clicking the icons against each VCT on our Open VCTs page. If you have any difficulties please use the contact form below.

• Read the information on this page to understand some general features of VCTs

• Understand our service by reading and retaining Clubfinance’s Combined Initial Disclosure Document (key facts about our services), Clubfinance’s Terms of Business, and Clubfinance’s Client Declaration. All can be obtained from the Documents page of our website

• Find out more about individual VCTs on our VCT listing page; read and retain the Prospectus(es) or Securities Note(s) for your chosen VCT(s). Note that only a Securities Note, together with a Summary Note and Registration Document constitute a Prospectus. Where a complete Prospectus is not available on our VCT listing page, please follow the instructions in the Securities Note to obtain the other documents.

• Generate a Commission Statement for your chosen VCT(s) to find out how much commission Clubfinance will receive and how much of this will be rebated to you. You can generate a Commission Statement using the following link:   Commission Statement Generator

• Read and retain a copy of Clubfinance’s VCT Additional Risk Warnings

• If you decide to go ahead, please send your completed application form, signed Client Declaration, proof of name and address, and a personal cheque drawn on a bank or building society account in your name (see Identification Requirements Information for details) to:

VCTs & EISs
Clubfinance Ltd.
PO Box 1036
Hemel Hempstead
HP1 2WU

• Cheques must not be made out to Clubfinance Ltd., but you must send your application to Clubfinance to benefit from our discounts. Completed applications should reach Clubfinance at least 3 working days before the deadline given in the Securities Note / Prospectus, but please be aware that VCTs can close early, and we cannot submit incomplete applications or applications without adequate supporting documentation.

Open VCTs

The following shows a list of VCTs available for investment through Clubfinance. If there is an VCT open for investment which is not on the list please contact us using the form below. Please click on the VCT for further details including application forms.

Baronsmead VCT and Baronsmead VCT 2 joint offer
Downing Protected VCT II & III
Ingenious Entertainment VCT 1 & 2
Noble AIM VCT
Octopus Protected VCT 2
Octopus Titan VCT 3
TP5 VCT

Open VCT Portfolio Services

Octopus VCT Portfolio Service

Performance and Prices of Existing VCTs

A useful external website for information on the prices and past performance of VCT shares is Trustnet, see link below. Using this links, you will leave the Clubfinance website and we have no responsibility for the content. Past performance is no indicator of future performance.

Trustnet VCT Performance

Contact Form

For a Prospectus / Securities Note and application form, or further information, including a Commission Statement, please see our list of currently available VCTs. If you require any further information or clarification, please use the form below to contact us. Please remember we offer an execution-only service. Please contact a financial adviser if you need advice.

* - we need this in order to provide you with estimated commission and rebate details
 

Clubfinance Ltd is authorised and regulated by the Financial Services Authority. Clubfinance offers an execution-only discount broker service; Clubfinance does not give advice or recommendations. If you have any doubt about the suitability of a particular product or service, or you require advice, you should seek a personal recommendation from an appropriate firm that does give advice. Clubfinance does not produce the products it arranges, or manage the underlying investments. Payments must not be made to Clubfinance, but to the relevant product provider. Contact details for Clubfinance can be found under ‘contact us’. Users of this website should be aware of the following:

• Past performance is not a reliable indicator of future results.

• The value of investments and the income from them can fall as well as rise as a result of market and currency fluctuations. For many types of investment, you may be placing your capital at risk, meaning that you may not get back the amount originally invested and you may risk losing your entire investment.

• Some investments and policies may only be suitable as medium or long-term products.

• Tax treatments depend on your individual circumstances and may be subject to change in future.

• This website contains financial promotions relating to services offered by and products available through Clubfinance.

• In the event of any conflict between product literature and information provided by Clubfinance, the product literature shall prevail.

The information on this website is intended solely for the use of those people who are United Kingdom residents for tax and investment purposes and is governed by our terms and conditions of website usage, please click here for details. It is not for distribution in any other jurisdiction, including the United States of America. Anyone who is not a UK resident should not continue with this site unless wishing to read about personal finances available to UK residents for informational purposes only.

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