Venture Capital Trusts

Tax efficient investment to support the UK economy

Why Venture Capital Trusts?

The Northern Venture Capital Trust (VCT) Funds back high-quality management teams in businesses that have the potential for significant growth

Northern Venture Capital Trust Funds

Tim Levett, Northern VCTs

Investing into VCTs

If like many private investors you are looking to supplement your investment portfolio with a solution that could offer higher returns, then Venture Capital Trusts (VCTs) may be for you.

Freedom and flexibility

The reduction of the lifetime allowance from £1,250,000 to £1,000,000 in 2016 might have made traditional pensions less attractive for high earners, but with more flexible pension withdrawals now available, it does mean that there can be greater freedom for retirement planning. This freedom is increasingly being channelled towards VCT funds which have become a highly attractive alternative for a relatively new generation of investors.

As an investor into a VCT the tax relief is incredibly attractive and is the government’s way of encouraging people to support often higher risk smaller businesses.

We invest in a diversified portfolio of high-growth businesses

What tax reliefs are available?

  • Income Tax Relief – individual shareholders aged 18 or over can claim income tax relief at the rate of 30% of up to £200,000 annual investment, provided their shares are held for at least five years.
  • Dividends – no income tax is payable on dividends from ordinary shares in VCTs.
  • Capital Gains Tax (CGT) – No CGT is payable on disposals by individuals of ordinary shares in VCTs.

The Northern VCTs

Through our Northern VCT funds Merica can provide an investment opportunity with exposure to innovative, small companies. Led by highly ambitious management teams this VCT portfolio has the potential to generate significant value for our VCT shareholders. These portfolio companies are also helping to stimulate the wider UK economy along the way which satisfies investors seeking responsible investment strategies.

What do the funds invest in?

Mercia’s VCT funds invest across a range of innovative sectors from bioscience through to software and consumer goods providing investors access to unique opportunities. Whilst these do carry a degree of risk, as is the nature of all early stage investment, they do also offer high rewards for those seeking a high-risk, high-reward profile

How much do I need to invest?

You can invest up to £200,000 into VCT funds in any tax year. The Northern VCT Funds which Mercia manages has a minimum £6000 investment level.

What are the risks?

VCTs are not for everyone. They carry a degree of risk as the companies in which they invest are early stage, which can mean less well-established businesses.  It is important that you carefully research the opportunities and seek professional advice from a properly regulated entity or professional

Why Mercia?

Mercia’s investment Team has an established track record delivering returns for shareholders across both private and public sector mandates. Not only does the Group invest and manage more than £180million on behalf of the British Business Bank, but it also raises, invests, and manages its own VCT EIS and SEIS funds too. Over the years the VCT team has started to build an enviable track record making it one of the most promising VCT teams in the country.

The team, which is led by industry experts Tim Levett and Charlie Winward, is well established and following the integration into Mercia in December 2019 is also able to leverage the resources of the wider Mercia Group providing an unrivalled access of proprietary deal flow.


Developing innovation

Interview with Medovate’s Managing Director, Stuart Thomson

Raising funds from VCTs

Are you part of an ambitious management team looking to raise funds for your business?

SHE Software CEO Matthew Elson

Supercharging growth using VCTs

Investment from venture capital trust (VCT) funds could help to supercharge your business’s growth.

Mercia backs high-quality management teams in businesses that have the potential for significant growth. Ideally these are scale-up businesses with market validation, but occasionally we may back earlier stage ventures and we do all of this through our Northern VCT Funds.

The Northern VCT Funds are generalist by sector, expecting our portfolio businesses to have strong differentiation which is often through technology. You will share with us an understanding of the need for more than just capital and be willing to partner with us over the long-term to maximise value.

We’re looking for you

Mercia backs companies that offer significant potential for growth, but it is also fair to say that we won’t back a business unless our visions and cultures are aligned too.  We also hope you are brilliant at what you do of course.

Are you looking for us?

One of the benefits of VCT investments is that the deals are not simply about investment capital. Most of our portfolio choose to work with us because we can add real value to the business too.  We have stacks of sector expertise, operational experience and huge networks which means that we can help our portfolio to get from A to B quicker than most.

You’re in the driving seat

As leaders of the business we expect that you will know your products and markets inside-out and whilst we will add operational and strategic support to generate value  it will be your insight, ideas and drive which will continue to lead your business.

We’re looking for companies that are

  1. Seeking between £1million and £5million investment
  2. Led by ambitious and brilliant management teams
  3. Already achieving revenue growth
  4. Able to meet the ‘Risk to capital’ condition as set out by HMRC
  5. VCT qualifying – which means you
    1. have less than £15million of assets upon completion of the transaction
    2. employ less than 250 people or for a Knowledge Intensive Company, 500 employees
    3. are not listed on the stock exchange or controlled by another company.

Enterprise Investment Scheme (EIS)

A well-diversified portfolio

The popularity of Enterprise Investment Scheme (EIS) Funds is bolstered by the range of opportunities that a well-diversified portfolio of knowledge-intensive small companies can offer. These investments can help to deliver a desired level of return, especially in those companies with strong IP and which are already gaining traction. For these companies that have already proven themselves EIS can offer them the investment injection they need to crystallise future success.