A Venture Capital Trust (VCT) is an investment company broadly similar to an investment trust. It will be quoted on a regulated market and will have to invest at least 70% of its assets in companies that would qualify under the EIS, and must distribute most of its income by way of dividend. It must be able to demonstrate a spread of investments: none can account for more than 15% of the value of its portfolio. There are other conditions for VCTs.
The EIS is a government scheme that allows certain tax reliefs for investors who subscribe for qualifying shares in qualifying industries.
The SEIS is similar to the EIS except that this is targeted at investors who subscribe for shares in early stage companies where the risk is often greater.
Individuals may make an eligible investment and deduct 30% of the cost of their investment from their income tax liability, either for the tax year in which the investment is made or the previous tax year.
The reliefs for Venture Capital Trusts, the Enterprise Investment Scheme and the Seed Enterprise Investment Scheme are similar in many respects, but there are some significant differences.