How to buy and sell VCTs

How to invest in a VCT

In order to invest in a VCT you need to complete the application form found at the end of the relevant prospectus. A prospectus can be obtained by telephoning our Help Desk on 0117 900 9000 or by visiting the current offers page. The completed form needs to be sent to us together with your cheque payable to the VCT (and not Hargreaves Lansdown). You will then receive your share and tax certificates directly from the VCT company once the shares have been allotted. Please be aware that this often takes four weeks as shares are generally allotted once a month. If you wish to transfer these shares into your Vantage Share Account, this can be done once you receive the share certificate. You can apply for new shares in the Vantage Service or a nominee account - however you would not receive the initial tax rebate if you did.

You should not invest in a VCT with a view to selling the shares. As explained previously the NAV and share price may differ significantly. You should envisage getting your return predominantly via the tax free distributions.

How do I monitor performance?

Although VCTs are quoted on the stock market and listed under investment companies, for a variety of reasons the share price performance often does not reflect the value of the underlying investments. Looking at how the share price has or hasn't moved over the life of the VCT doesn't accurately show how a VCT has performed. VCTs are ultimately income producing assets. Dividends are paid out from the profits after realising one or more of the underlying investments. Looking at the current NAV and combining that with the dividends paid to date from launch will give you an indication of performance - please note that NAVs are often updated only twice a year.

How to sell VCT shares

If you do need to sell, you have two options. The simplest and quickest is to sell your shares via a stockbroker. Hargreaves Lansdown can provide this service. You should be aware that only one market maker may be offering to buy the shares and this could have a negative effect on the price. Alternatively the VCT company may offer to buy the shares from you. It is always worth investigating which is the most profitable option as market conditions may dictate which service is the best at that time.

Previous rule changes removed the option of deferring a capital gain into a VCT. However, many investors will have taken this option in the past. One thing to remember when disposing of existing VCT shares is that if you deferred a capital gain you could possibly be liable for that gain again when selling the VCT shares, meaning you may potentially have to pay tax. In addition, don't forget that if you sell your VCT in the first five years, you will have to pay back your tax rebate.