VCTs – A year-round investment opportunity

Among other reasons, the tax benefits of investing into a Venture Capital Trust (VCT) have long made them an attractive proposition for investors. These benefits include:

  • 30% income tax relief
  • All dividends free from income tax
  • All gains free from capital gains tax.

These benefits are subject to a maximum total individual investment of £200,000 in this tax year and the investment must be held for at least five years.

VCTs are usually either purchased:

  • At the very beginning of the new tax year, when individuals have their full £200,000 annual allowance available to them
  • Or in the run up to 5th April, when the time to take advantage of that year's allowance is coming to an end.

Each VCT is generally open to new investment periodically throughout the year, with many starting new offers before the beginning of the new financial year to take advantage of a period of increased demand.

We are encouraging the idea that investment into a VCT should not be limited to the weeks surrounding the beginning of the new tax year, but should be considered all year around, as long as this type of investment suits your personal circumstances.

There are currently various VCTs open to new investment. Here are some of those that can currently be purchased through Chelsea Financial Services:

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. 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.

 

Generalist VCTs

Calculus VCT

This VCT invests in more established, unquoted companies, with the potential for an exit within three to five years. They have a portfolio spread over a number of sectors including hosted software, life sciences, leisure and hospitality, manufacturing, energy and transportation.

  • Closing date: 21st October 2016
  • Minimum investment : £5,000
  • Initial Charge: 5%
  • Chelsea Discount: 2%; 2.5% for existing investors 
  • Initial charge after Chelsea discount: 3%; 2.5% for existing investors

Downing ONE VCT

Downing ONE blends higher and lower risk opportunities, and has a diversified portfolio of around 90 investments. The aim is to offer a steady income along with some capital growth, with the level of risk lowered through asset-backed investing.

  • Closing date: 31st August 2016
  • Minimum investment: £5,000
  • Initial Charge: 4%
  • Chelsea Discount: 2.25%
  • Initial charge after Chelsea discount: 1.75%

Foresight VCT

Traditionally focusing on technological investments, but now a generalist VCT, Foresight aims to invest in more established companies with a proven product or service. Following a merger of Foresight VCT with Foresight 2 VCT, investors now get exposure to 27 companies, up from 19 previously.

  • Closing date: 31st August 2016
  • Minimum investment: £3,000
  • Initial Charge: 5.5%
  • Chelsea Discount: 3%; 3.5% for existing investors
  • Initial charge after Chelsea discount: 2.5%; 2% for existing investors

Octopus Apollo VCT

This VCT aims to invest into established, profitable companies and offer the investor a regular tax-free dividend. Although it is a generalist VCT, it specialises in healthcare and renewable energies, with an emphasis put on making a positive contribution to society.

  • Closing date: 1st November 2016
  • Minimum investment: £5,000
  • Initial Charge: 5%
  • Chelsea Discount: 2.5%; 3% for existing investors
  • Initial charge after Chelsea discount: 2.5%; 2% for existing investors

Pembroke VCT

This is the newest VCT on this list, having launched in 2013. The focus is on consumer-facing businesses with an established brand or where brand development opportunity exists, with not as much emphasis on whether the company is a start-up or established.

  • Closing date: 30th September 2016
  • Minimum investment: £3,000
  • Initial Charge: 5%
  • Chelsea Discount: 3%
  • Initial charge after Chelsea discount: 2%


AIM VCTs

Hargreave Hale VCTs 1&2

Both VCTs 1&2 have broad portfolios of investments to reduce stock-specific risk. Both invest into a mix of companies that are already profit-making and those in earlier stages of their development, with good potential for growth in the future.

  • Closing date: 16th November 2016
  • Minimum investment: £5,000
  • Initial Charge: 3.5%
  • Chelsea Discount: 1%
  • Initial charge after Chelsea discount: 2.5%

Octopus AIM VCTs 1&2

Octopus pride themselves on strong working relationships with the companies into which they invest. These VCTs aim to invest into companies that are established and already profit-making, but still have potential for growth in the future.

  • Closing date: 1st December 2016
  • Minimum investment: £5,000
  • Initial Charge: 5.5%
  • Chelsea Discount: 2.5%; 3% for existing investors
  • Initial charge after Chelsea discount: 3%; 2.5% for existing investors

As you can see, there are still opportunities out there for investors thinking of investing into a VCT at this time.

Please ensure that you read and fully understand the prospectus of any VCT before deciding to invest.

You can find more information on our website: https://www.chelseafs.co.uk/products/vct/offer

If there is anything that you do not understand or you have any further questions then please call our office. Our experienced and helpful staff are always available to speak to you on 020 7384 7300.

Published on 22/08/2016