HMRC's published guidance on Venture Capital Trusts summarised across five tax years. Income tax relief fell from 30% to 20% for subscriptions made on or after 6 April 2026. Tax-free dividends and CGT exemption on disposal remain unchanged. All figures sourced from GOV.UK.
All figures sourced from HMRC's published guidance on GOV.UK. Rates apply to UK resident individuals aged 18 or over investing in newly issued VCT shares.
Per HMRC's published policy paper on GOV.UK (November 2025), the VCT income tax relief rate was cut from 30% to 20% with effect from 6 April 2026. This rate change applies to subscriptions for newly issued VCT shares made on or after 6 April 2026. Shares subscribed for on or before 5 April 2026 retain the original 30% income tax relief rate, subject to the 5-year holding period and standard clawback rules per HMRC's published guidance. This change was announced at the Autumn Budget 2025 and subsequently enacted through Finance Bill 2025-26. The VCT scheme has been operational since 1995; the 30% rate had been in place since 2006.
Per HMRC's published guidance, the 20% rate applies specifically to subscriptions made on or after 6 April 2026. Shares subscribed for on or before 5 April 2026 retain the original 30% income tax relief rate, subject to the 5-year holding period and the standard clawback rules. If income tax relief was claimed at 30% on a pre-6 April 2026 subscription and the shares are disposed of within 5 years, the full 30% relief must be repaid — not the new 20% rate. This distinction matters for planning purposes. This is a summary of HMRC's published guidance. Consult a qualified professional regarding your specific position.
⚠️ Relief at 30% only retained if shares held for the full 5-year minimum period
✓ Tax-free dividends and CGT exemption on disposal remain unchanged
HMRC's policy paper setting out the VCT income tax relief rate reduction, expanded company limits and other April 2026 changes is published at GOV.UK — VCTs and EIS: investment limit increase and restructure (November 2025). The VCT legislation is contained in Part 6 of the Income Tax Act (ITA) 2007. HMRC's VCT investor guidance is at GOV.UK: Venture Capital Schemes Tax Relief for Investors.
The April 2026 change reduced only the income tax relief rate. The other VCT tax advantages are confirmed by HMRC's published guidance as unchanged. This page sets out each relief separately, with the applicable conditions per HMRC's guidance.
Per HMRC's published guidance, income tax relief is available to individuals aged 18 or over who subscribe for newly issued VCT shares. Relief reduces the investor's income tax bill by the applicable percentage of the amount subscribed — it cannot create a tax refund beyond nil. Relief is restricted to the investor's actual income tax liability for the year.
Per HMRC's published guidance, if VCT shares are disposed of within 5 years of the date of issue, all income tax relief previously received must be repaid to HMRC in full. If the VCT ceases to be an approved VCT during the 5-year period, relief may also be withdrawn. HMRC monitors VCT approval status annually. This is an informational summary only.
Per HMRC's published guidance, dividends from qualifying VCT shares are entirely exempt from Income Tax. There is no limit on the amount of VCT dividend income that can be received tax-free. Dividends from VCT shares do not need to be entered on a Self Assessment return. This exemption applies regardless of whether the 30% or 20% income tax relief rate was claimed on the subscription — and is unaffected by the April 2026 change.
Per HMRC's guidance, VCT dividends are exempt at source and do not need to be declared anywhere on a Self Assessment return. This distinguishes VCTs from EIS and SEIS, which do not provide dividend relief, and from ISAs (where dividends are only sheltered inside the wrapper). Dividends from non-qualifying VCT shares (for example, shares in a VCT that has lost its approved status) are not exempt. Verify the VCT's approval status via HMRC's guidance on GOV.UK.
Per HMRC's published guidance, gains on the disposal of VCT shares are exempt from Capital Gains Tax, provided the shares were acquired as newly issued shares and the 5-year minimum holding period has been met. Unlike EIS and SEIS, where the CGT exemption is linked to income tax relief being retained, the VCT CGT exemption is a freestanding relief — an investor who did not claim income tax relief (for example, because they had insufficient tax liability) may still benefit from the CGT exemption on disposal.
Importantly, losses on VCT shares cannot be used to offset other capital gains. The CGT exemption works in both directions: gains are not taxed, but losses are not allowable. The loss-relief provisions available for SEIS and EIS do not apply to VCTs.
Illustrative only. Relief requires sufficient income tax liability. Actual reliefs depend on individual circumstances. This is not financial or tax advice — always seek qualified professional guidance before investing in VCTs.
The table below sets out HMRC's published VCT rates for each tax year from 2022/23. All figures are sourced from HMRC's published guidance on GOV.UK. Where rates changed mid-year, the change date is noted. This is a reference summary — not advice.
| Tax year | Income tax relief rate | Investor annual limit | Dividend tax treatment | CGT on disposal | Minimum hold |
|---|---|---|---|---|---|
| 2022/23 | 30% | £200,000 | Tax-free | Exempt | 5 years |
| 2023/24 | 30% | £200,000 | Tax-free | Exempt | 5 years |
| 2024/25 | 30% | £200,000 | Tax-free | Exempt | 5 years |
| 2025/26 | 30% | £200,000 | Tax-free | Exempt | 5 years |
| 2026/27 (from 6 Apr 2026) | 20% ↓ | £200,000 | Tax-free ✓ | Exempt ✓ | 5 years |
Source: GOV.UK — VCT Tax Relief for Investors & GOV.UK — EIS and VCT Changes Policy Paper (Nov 2025). Not advice.
Per HMRC's published policy paper, the same company-level limit increases applied to VCTs from 6 April 2026 as to EIS. This expands the pool of qualifying companies into which VCTs can invest.
| Company limit | Before 6 Apr 2026 | From 6 Apr 2026 |
|---|---|---|
| Annual investment into a single company | £5m | £10m |
| Company gross assets (before investment) | £15m | £30m |
| Company gross assets (after investment) | £16m | £35m |
| Investor annual subscription limit | £200,000 | £200,000 — unchanged |
Source: GOV.UK — EIS and VCT Changes Policy Paper (Nov 2025)
Per HMRC's published guidance on GOV.UK, a Venture Capital Trust is an HMRC-approved investment company listed on a recognised stock exchange (in practice, the London Stock Exchange) that pools investor capital and deploys it into qualifying small unquoted UK companies. The VCT structure provides investors with diversification across a portfolio of early-stage businesses, combined with the tax advantages detailed above.
Per HMRC's guidance, VCT income tax relief is claimed on the Self Assessment return for the tax year in which the shares were subscribed. The VCT issues a certificate to investors confirming the amount eligible for relief. Carry-back is not available for VCT income tax relief — unlike EIS and SEIS, relief can only be claimed in the tax year of subscription.
Per HMRC's guidance, VCT income tax relief cannot be carried back to the previous tax year. This differs from EIS and SEIS, where carry-back is available. A subscription made in 2026/27 attracts only 20% relief and can only be claimed in 2026/27. There is no mechanism to have it treated as a 2025/26 subscription at 30%. This is a summary of HMRC's published guidance.
No sign-up required. Results are estimates based on HMRC's published rates. VCTs are higher-risk investments. Always consult a qualified professional before subscribing.
This page is a summary of HMRC's published guidance only. VCTs carry significant investment risk. Our free matching service connects you with verified UK tax specialists who can discuss your individual circumstances.
Answers based on HMRC's published guidance with direct GOV.UK source links. This is an informational guide only.
This page is a summary of HMRC's published guidance. VCTs are complex, higher-risk investments. Our free matching service connects you with verified UK tax specialists.
Per HMRC's published guidance, Business Relief (formerly Business Property Relief) operated differently in each period covered by this guide. Before 6 April 2026 (covering 2022/23, 2023/24, 2024/25, 2025/26): 100% relief was available on qualifying business assets with no monetary cap — unlimited relief applied where the qualifying conditions were met. From 6 April 2026 (2026/27 onwards): the first £2.5 million of qualifying assets per individual receives 100% relief; any excess receives 50% relief (an effective 20% IHT rate). The £2.5 million cap applies to the combined total of Business Relief and Agricultural Property Relief qualifying assets. The cap is transferable between spouses and civil partners on death, allowing up to £5 million per couple. Readers researching historical tax years prior to 6 April 2026 should apply the unlimited relief rules for those years. See GOV.UK: Business Relief for Inheritance Tax.
Important — informational guide only, not tax or financial advice. UK Tax Hero summarises HMRC's published guidance as a free information and expert-matching service. Nothing on this page constitutes personal tax advice, financial advice, investment advice or legal advice. VCTs are higher-risk investments — the value of shares can fall to zero and past performance is not a guide to future results. Figures, rates and rules are based on HMRC's published guidance for 2022/23 to 2026/27 and may be subject to change. Always verify on GOV.UK and consult a qualified tax and financial professional before making any investment decisions. UK Tax Hero is not regulated by HMRC, the FCA or any professional body and does not provide regulated financial advice.
