VCT's

[UpTheIron]

Does anyone here invest in VCT's at all?

As a former company director turned PAYE employee I'm keen on investments that will reduce my tax burden, and I'm pretty comfortable with a 5 year term compared to locking the funds away in a pension (20 years away for me, and I plan to be retired sooner!). I have a "safe" income vehicle already in place, with a small-ish traditional pension and some B2L property. I don't really want to increase my taxable income by getting another property or two.

Hence looking at VCT's, and some willingness to accept more risk.

Any personal successes or horror stories, tips or pitfalls would be welcomed.

[UpTheIron]

Ginge R said:

Hammers fan ?!/

Close - Shorpe United!

Ginge R said:

Looked too, at SEIS/EIS and SITR? They probably wouldn't be suitable but if they are, make informed decisions based on advice you trust, whether that's from a bloke in the bank, an IFA or a good mate. But with these sorts of investments, as you're doing, do your research and think long and hard first. http://www.hmrc.gov.uk/sitr/

Thank you for the detailed reply. VCT's make some sense alongside my other investments and the tax relief is a significant added bonus.

I've also since looked more closely at SEIS & EIS, as I also have an impending CGT bill, and as I have yet to invest much of the proceeds then these may provide another option. What I can't find though is a "calculator" I can make sense of...

e.g Say I have a £500k gain, which is eligible for Entrepreneurs relief, so the CGT bill is £50k ignoring any personal allowances. How does the CGT reinvestment relief work? If I found a suitable investment that I wanted to invest £100k in, what relief would I get on that? Presumably not 28% due to the Entrepreneurs relief I already plan to claim. So 10%? Or can I not mix the two?


Updated to perhaps answered my own question, but can't make absolute sense of the HMRC guidance, so not sure how SEIS CGT relief and Entrepreneurs Relief interact, but I suspect it isn't how I would like them to!...

£500k chargeable gain arising 2014/2015
£50k+ income tax over 2013/2014 and 2014/2015

£100k invested in one or more SEIS
£50k income tax relief
£28k CGT relief
£22k net investment cost

That leaves £400k of chargeable gain not offset against the SEIS, on which I would claim ER, thus paying £40k (ignoring annual allowance)

• Or* is ER applied first, in which case the CGT relief I could claim on the SEIS investment would be 10%, resulting in:

£500k chargeable gain arising 2014/2015
£50k+ income tax over 2013/2014 and 2014/2015

£100k invested in one or more SEIS
£50k income tax relief
£10k CGT relief
£40k net investment cost


The first calculation makes some of the SEIS opportunities look attractive, the latter not so much - which would be back to plan A of paying the CGT bill and focussing on adding some VCT's to my portfolio.

Edited by UpTheIron on Friday 19th September 13:13

Edited by UpTheIron on Friday 19th September 13:14

[UpTheIron]

Ginge R said:

Scunny??!! Used to go there every now and then 20 years or so ago.

Thanks. PM sent. I try to avoid the town myself too, and it hasn't changed much in 20 years other than gone further downhill!!!