An investor wants a tax- efficient vehicle for investing in small unquoted firms . The investor also wants to reduce risk by pooling the investment with others. Which approach is most suitable?

Question

Quizplus · Accepted Answer

Investing in a Venture Capital Trust (VCT) is a tax-efficient way of investing in small unquoted firms, as VCTs are eligible for a range of tax reliefs, including income tax relief and exemption from capital gains tax. Additionally, by pooling investments with others, the risk can be reduced as the VCT invests in a portfolio of companies, rather than just one. The other options, such as investing in the Enterprising Investment Market or the Alternative Investment Market, may also involve investing in small unquoted firms, but they do not offer the same level of tax efficiency or risk reduction through pooling of investment. Becoming a Business Angel, on the other hand, may offer some risk reduction through diversification, but it is not a tax-efficient vehicle for investing.

An Investor Wants a Tax- Efficient Vehicle for Investing in Small