What happened in the Chancellor's statement?

Prior to the Chancellor's Autumn Statement in November, rumours were rife that HMRC could implement a number of rule changes for VCTs.

One of the expected changes was to the current 'qualifying investment' criteria. Some VCT managers became concerned that, in a bid to focus managers on riskier younger businesses and away from asset-backed schemes, some sectoral exclusions would be put in place.

Another potential scenario which concerned managers was that income tax relief on newly-issued shares would be slashed from 30% to 20% or more. Again, this would have been in a bid to move VCT managers away from focusing too much on capital preservation and instead shift their attention to higher-risk assets.

As such, many VCTs – which normally open to new investors near to the end of the tax year – introduced top-up offers in September to raise money before any potential changes were made. This means that opportunities to invest in big names such as Baronsmead, Northern and Unicorn AIM VCTs have already come and gone.

Were the fears of large-scale change justified? There were indeed some changes – for instance, risk-to-capital now has to be greater than the initial tax relief available in order for investments to qualify. But, generally speaking, the VCT space remains much the same as it was before.

Have I missed out?

In a word, no. We have seen the aforementioned VCT houses reach their capacity, but for those investors that understand the risks of VCTs, there are still high-quality options out there. Albion, Amati, Calculus, Downing ONE, Foresight 4, Maven, Mobeus, Octopus TITAN, Pembroke and Puma all still have offers open and Hargreave Hale are coming out with a top-up offer in February.

How do I invest?

Find details about which VCTs are currently open and the discounts available here or call our office on 020 7384 7300 for more

Want to be kept up-to-date with newly opened VCTs?

If this is a service that you are interested in, please either e-mail or phone us on 020 7384 7300, and we will let you know and and when VCTs become available. 

Important notice: VCTS
Please be aware that VCTs are long-term investments. VCTs usually invest in small, unquoted companies and therefore carry a greater risk than many other forms of investment. They are also very illiquid and you may have to hold them for longer than the minimum five-year investment period. In addition, the level of charges are often greater than unit trusts and OEICs.

Past performance is not necessarily a guide to the future. The value of investments, and the income from them, can fall as well as rise, due to market and currency fluctuations and you may not get back the amount originally invested. All our featured products should be regarded as medium to long-term investments. Chelsea Financial Services offers an execution-only service.

If you require investment advice you should contact an expert adviser. Tax assumptions are subject to statutory change and the value of tax relief (if any) will depend upon your individual circumstances.

Published on 17/01/2018