Venture Capital Trusts (VCT) and Enterprise Investment Schemes (EIS) are two investments that can help you save tax.

The government supports these investments with such generous tax savings because they help to small, innovative companies grow in size. 

When companies increase in size, the number of people in jobs, who pay income tax increases which provides more tax to the government.

A VCT is an investment in a company that invests in shares in other companies. This could be 40 or as many as 140 other companies (or maybe even more!) 

An EIS would be shares in just one company, or shares in a narrow range of companies if it is held as a fund, less than 20. This makes them significantly higher risk than a VCT.


Want to find out more? Talk to an adviser today on 01793 686393 to get more information

What are the differences?


  • 30% tax relief in the year of investment, £100,000 invested this tax year would give you £30,000 back in tax in the same year
  • Has to be kept for at least 5 years to retain the tax relief 
  • Pays out tax free dividends 
  • Invest up to £200,000 per year


  • 30% tax relief applies when the money is invested into the underlying companies by the EIS provider. However, some or all of the relief can be carried back to previous tax years
  • Has to be held for at least 3 years, but in reality has to be held for longer
  • Can be used to defer capital gains tax 
  • Invest up to £1,000,000 (£2,000,000 in some cases) per year

The Risks

It is no secret that VCT and EIS investments are higher risk than some other investments, but this doesn’t make them the riskiest investment out there.

A 30% return on your investment from refunded tax, means your initial investment has to drop by 30% before you lose any money. 

Combine this with experienced investment managers, who support the companies they invest in to grow, to choose the companies to be part of the VCT and EIS, the risk is very well managed. 


Let’s say, you had spare money in the bank, and one of your friends comes up to you and says, “Can I borrow some money please? I have a great business idea you’re going to want to get in on”.

How can you check their plan? Who does the due diligence? Checks the current competitors and market conditions? How will your friendship fare if it all goes wrong?

Now compare that to a VCT, where there are a pool of 40-140 companies, hand picked by experts, with the support of a specialist every step of the way to help the business grow, which one is higher risk? and which one gives you 30% of your investment back in tax?

Even with an EIS, where there may only be 10-15 companies, they are still hand picked and given support, with a 30% tax saving, would still be less risk than a single business investment. 

More and more investors are using VCTs and EIS to diversify their portfoliocontact us on 01793 686393 to see how these investments can work for you.


VCTs and EIS’s often get lumped together when talking about investments. They are two very different animals

There are fewer reasons to look beyond a VCT toward an EIS for an investor looking to reduce their income tax liability, unless your income tax bill is greater than £60,000. This is the maximum relief that can be claimed by an individual investing in a VCT as it is 30% of £200,000. 

However, from a capital gains tax, inheritance tax point of view, the EIS does have an advantage, as well as having greater contribution limits and therefore the ability to claim more tax relief. 

Click below to find out more about how VCTs or EIS could help you save money on tax. 

If you want advice on how to reduce your tax from a UK Qualified Independent Financial Adviser, then phone now on 01793 686393 or contact us online.