Small businesses have a hard time raising investment capital because they have little in the way of assets, branding or financial support needed to develop and expand.

A Venture Capital Trust (VCT) is a fund created by the government in the 90s to support investment directly the small and private businesses, with some generous tax incentives for shareholders.

The downside is that the associated risk of a firm failing is fairly high. However, global names such as Twitter, Microsoft and Amazon have become enormously successfully listed companies with the help of VCT funding.

For investors, the big plus is the tax relief, with 30 per cent upfront relief against income tax, tax-free dividend payments, and Capital Gains Tax (CGT) exceptions.

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