A venture capital trust or VCT is a tax efficient UK closed-end collective investment scheme designed to provide venture capital for small expanding companies, and income (in the form of dividend distributions) and/or capital gains for investors. VCTs are a form of publicly traded private equity, comparable to investment trusts in the UK or business development companies in the United States. They were introduced by the Conservative government in the Finance Act 1995 to encourage investment into new UK businesses. The structure of a VCT is that of a public limited company on the London Stock Exchange. They invest in other companies which are usually not themselves listed, although VCTs can also invest in AIM companies, and some VCTs specialise in this area. VCTs tend to have a minority stake in the businesses they invest in, as opposed to private equity investing, where a majority stakeholder position is held. Tax reliefs Tax reliefs are different for investors in new shares issued by VCTs and investors who purchase second-hand shares, for example on the stock market. For second-hand shares, the reliefs are exemption from income tax on dividends on ordinary shares in VCTs exemption from capital gains tax on disposal of shares in VCTs For new shares, the same reliefs are available, and in addition income tax relief at the rate of 30% on the amount subscribed for the shares (on or after 6 April 2006). This relief is available on investments up to £200,000 in a tax year (£100,000 before 6 April 2006), if they are held for at least 5 years (3 years for shares issued before 6 April 2006). for shares issued before 6 April 2004, capital gains tax deferral (that is, tax on the gains on the disposal of other assets within 12 months before or after the investment could be postponed until the VCT shares were disposed of). Compared with the issue price of new shares in VCTs, the price of VCT shares on the stock market (second-hand shares) tends to be lower, reflecting the absence of income tax relief. Criteria VCTs raise funds through issues of new shares. The managers of the VCT then have three years in which to invest this money. During this time they may hold the funds as cash or cash equivalents, or buy gilts, bonds and in some cases unit trusts / OEICs to attempt to maximize investor return. Within