Permitted business activities

To qualify for VCT funding, a company must have a permanent UK presence and conduct what HM Revenue & Customs defines as a ‘qualifying trade’. While most trades are eligible, certain sectors are excluded as they are deemed less in need of financial support. These exclusions currently include land dealing, financial services, forestry, farming, hotel management, and energy generation.

Company size

To be eligible for VCT investment, a company must have gross assets of £15 million or less at the time of investment, rising to no more than £16 million immediately afterwards. It must also employ fewer than 250 full-time staff at the point of investment.

Investment limits

A VCT is permitted to invest up to 15% of its capital in a single company. Each business can receive a maximum of £5 million in VCT or other tax-efficient funding within a twelve-month period, with a lifetime cap of £12 million.

Company age

VCTs are generally required to invest in companies that are less than seven years old from the date of their first commercial sale. Exceptions exist for follow-on investments and when established businesses seek substantial capital to expand into new markets or product areas.