Gov backed investments in new startups via Octopus

[matty g]

Hiya Folks

I've just had a chat with a family member who's just told me her IFA has suggested (at her request regarding inheritance tax)that she could save her estate money by investing in a gov back new venture scheme for small businesses.

I'm worried she has taken his advice without doing her own research.

Am I ok to be worried or does it look ok.

We are talking about a lot of money


Thanks
Matt

[ellroy]

Octopus are a good outfit in the VCT/EIS space, been around for a good few years. Not the one's I'd use first off, but by no means the worst. In fact a few colleagues have worked for them over the years at various times.

This area of the market is risky though and good advice and due dilligence is imperative.

As a rule of thumb we'd only suggest 10% of investable assets into this sector unless a very old client, with a very agressive investment approach and the 2 years clock was the be all and end all for IHT planning.

Remember there are other providers of these types of investment so you can still get some diversification of approach if it is a large amount of cash.

Edited by ellroy on Thursday 28th May 15:44

[Hoofy]

Hrm. http://www.octopusinvestments.com/investors/guides...

[matty g]

Thanks Guys

She's getting on a bit but I'd like to think she'll be around longer than 2 yrs.

At least I don't need to panic about her IFA running off to Argentina with the money then.

[Simpo Two]

There is also some agricultural wheeze in which you have to be invested for at least two years to take the money outside the Estate. Hopefully an IFA will be along to tell us what it's called...

[Ginge R]

I'd echo what Ellroy said; Octopus are well established but probably not my first port of call. If IHT is an issue, has your relative considered a suitable entrusted insurance policy, Trusts, gifting, SEIS, BPR etc? Systemically, VCT are becoming less 'risky' in many ways, but the adage "The tax tail shouldn't wag the investment dog" should still be at the forefront of her thinking. You can save IHT, sure.. but is the nature of the underlying investment within the VCT wrapper still in keeping with her investment needs, wishes and feelings? Octopus is pricy. Costly isn't automatically bad, but it's still a consideration nonetheless.