A combination of aggressive reductions in the lifetime allowance (LTA), as well as restrictions on the pension annual allowance – such as the tapered allowance for high earners – has had a positive impact fuelling interest in VCTs as an alternative option for tax-efficient investing.
According to HM Revenue & Customs' VCT statistics, 2016 to 2017 tax year saw £570m invested in VCTs. This was an increase on 2015 to 2016 – and was the highest amount invested in one year since the heady pre-financial crisis days of 2005 to 2006. Of note – though figures are not yet available – 2017 to 2018 looks to be on course to overtake 2016 to 2017.
Whilst there are significant tax advantages available and the potential returns are attractive, liquidity and higher levels of investment risk to your capital mean that these are not suitable for everyone.
If you would like to explore this option and how it fits with your overall savings planning, please do not hesitate to contact us for Independent Wealth Management advice.