Skip to content

The thinking behind the money...

Pembroke Financial
The Thinking Behind the Money
Pembroke FinancialPembroke Financial

01273 774855 / 01444 405160
Client Login
  • Home
  • About Us
    • Meet the Team
    • In The Press
    • In The Community
  • How We Work
    • Protecting Your Personal Information
  • Our Services
    • Pensions Advice & Retirement Planning
    • Active Money Management – Savings & Investments Advice
    • Tax Advice & Tax Planning Services
    • Mortgage Advice
    • Life, Health & Corporate Insurance
    • Business Solutions
  • Resources
  • Blog
  • Contact Us
    • How to find us
Client Feedback
  • Home
  • About Us
    • Meet the Team
    • In The Press
    • In The Community
  • How We Work
    • Protecting Your Personal Information
  • Our Services
    • Pensions Advice & Retirement Planning
    • Active Money Management – Savings & Investments Advice
    • Tax Advice & Tax Planning Services
    • Mortgage Advice
    • Life, Health & Corporate Insurance
    • Business Solutions
  • Resources
  • Blog
  • Contact Us
    • How to find us

Tax efficient investing in Sussex: VCTs continue to attract investors

The latest statistics from HMRC show that Venture Capital Trusts (VCTs) are increasingly attractive to investors, offering potential tax benefits but substantial risk.

If you’re going to invest, consider acting before the upcoming tax year end… but take advice.

The data from HMRC shows the inflows to venture capital trusts (VCTs) have more than doubled since 2009/10.

Keith Bonner, Director & IFA Pembroke Financial Services, Shoreham IFA

Keith Bonner, Partner and Independent Financial Adviser specialising in tax efficient and ethical investments at Pembroke Financial Services of Shoreham, Sussex says “At the end of last year, HMRC published details of how much money was raised by VCTs in 2018/19. At £716m, the figure was the highest since 2005/06, when a temporarily higher rate of tax relief was on offer. The increased popularity of VCTs in recent years is at least partly due to the restrictions on pensions, such as the tapered annual allowance rules. The tightened pension limits have made pension contributions tax in-efficient for some high (and not so high) earners.”

In contrast, VCTs offer:

  • A 30% tax credit on investments of up to £200,000 per tax year. This is clawed back if the VCT shares are sold within five years;
  • All dividends are free of personal tax, provided the original investment was made within the £200,000 per tax year limit; and
  • No capital gains tax on any gains (but no relief for losses, either).

Keith comments “While VCTs are being used as a pension alternative to obtain tax relief, in investment terms VCTs are very different. Your choice of pension investments is almost limitless and can be as high risk or secure as you wish whereas, in stark contrast, VCTs have inbuilt in them a narrower investment choice and a high-risk profile.”

At least 80% of the investments underlying VCTs must be in relatively young, small companies that are not listed (other than on the AIM market). Over the years, successive Chancellors have ratcheted up the risk element by excluding a wide variety of businesses, from market gardens to wind farms.

The latest change to VCT investment rules took effect in April 2018 and introduced a specific ‘risk to capital’ requirement to prevent ‘safe’ investments being made.

Keith advises “That high-risk focus makes it all the more important to take advice when investing in VCTs.”

With the Budget now in March, the year-end season for VCT capital raising is well underway. Some VCTs have already closed their issues for the year, so if you wish to invest in VCTs to cut your 2019/20 tax bill, the sooner you act, the better. Our expertise can help you through this complex maze, so please call on 01273 774855 or email us by clicking here for help and advice.  

The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice. The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

Share on Facebook Share
Share on TwitterTweet
Share on LinkedIn Share
By James-Keeffe-Site-AdministratorFebruary 18, 2020
Tags: venture capital scheme investmentsventure capital trustsVCTsfinancial planning
Share this post
Share on FacebookShare on Facebook TweetShare on Twitter Share on LinkedInShare on LinkedIn Share on WhatsAppShare on WhatsApp

Author: James-Keeffe-Site-Administrator

Post navigation

PreviousPrevious post:Savings Advice Sussex: is the LISA an option for first-time buyers?NextNext post:Top ten tips for successful mortgage applications

Related posts

a woman looking at investments on her phone
Women are investing earlier than men, and it could close the wealth gap
August 9, 2022
Taking care of your investments - Rate hikes and recession warnings
Taking care of your investments – Rate hikes and recession warnings
August 8, 2022
A close-up of leaves growing with sunlight in the background.
ESG investing faces “greenwashing” criticism, but it could be a good thing for the sector
July 12, 2022
Following the announcement in the spring that the National Insurance (NI) threshold will increase for the 2022/23 tax year, HMRC has updated the guidance on the changes that are due to come into effect from 6 July 2022.
National Insurance threshold change from 6 July 2022
July 1, 2022
A group of people with their arms around each other laughing.
Young investors are championing the “S” in ESG investing, so what does it mean?
June 10, 2022
A person using a calculator while looking at a graph on a tablet.
8 key tax allowances have shrunk by 6% in the last decade
June 3, 2022
An older woman working on a laptop.
Two-thirds of retirees are planning a flexible retirement, but many don’t understand the potential tax implications
May 31, 2022
Two people reviewing financial data and graphs.
Investment funds: How do they work and how they could play an important role in your portfolio?
May 17, 2022
A person using a watering can.
Half of workers would choose a “green” pension and it could lead to ESG investments soaring
April 15, 2022
A woman depositing a coin into a piggy bank.
Why it pays to use your 2022/23 ISA allowance right now
April 12, 2022
A shopper using contactless payment to pay.
Your older pensions could be delivering “poor value for money”, and it could cost you thousands of pounds
April 8, 2022
Financial stock market graph on an abstract background
Investment market update: February 2022
March 22, 2022
A busy logistics and transportation location with cargo ships.
The ESG investment trends to watch out for this year
March 11, 2022
3 tips to manage your concern in an uncertain time
February 28, 2022
Categories
Recent Posts
  • Average standard variable rate reaches a 13-year high. Is it time you looked for a new mortgage deal?
    August 16, 2022
  • 7 essential money lessons your children need to know before they go to university
    August 12, 2022
  • a woman looking at investments on her phone
    Women are investing earlier than men, and it could close the wealth gap
    August 9, 2022
  • Taking care of your investments - Rate hikes and recession warnings
    Taking care of your investments – Rate hikes and recession warnings
    August 8, 2022
  • 5 crucial things you need to consider when reviewing your estate plan
    August 5, 2022
Testimonials

Great support and communication

Great support and communication throughout the entire process, by Julie.

Jez

Made a stressful process, feel so easy

Paul helped us find an amazing deal on our mortgage. Explained everything in simple terms for us and answered our many questions. Already recommended to friends. Thank you again for all your help, made a stressful process, feel so easy.

Kerrie Woodward

I have never received such splendid advice and attention

I very much appreciate the time and consideration you have taken on my behalf. I have never received such splendid advice and attention and I look forward to a long and happy Investment career with Pembroke Financial Services.

Pamela Bacon-Upshon
Contact Us
Shoreham: Marlborough House, 102-110 High Street, Shoreham-by-Sea, West Sussex BN43 5DB.
Phone: 01273 774855
Email: advice@pembrokefs.co.uk

Staplefield: 1 The Forge, Cuckfield Road, Staplefield, West Sussex RH17 6ET.
Phone: 01444 405160
Email: theforge@pembrokefs.co.uk

FacebookTwitterLinkedin