Which VCTS and EIS I would buy today
Tax pressure in Britain is at a 50-year high. Higher earners are feeling the squeeze as many traditional avenues of investing tax-efficiently have been blocked – from pension restrictions to the cuts to buy-to-let tax relief.
What tax-efficient options are left?
Two increasingly popular options for experienced investors are Venture Capital Trusts (VCTs) and the Enterprise Investment Scheme (EIS).
These are both government-backed schemes designed to incentivise private investment in young and dynamic small companies.
The reward for investors is significant tax reliefs in the short term, with the potential to back the next £1 billion company in the long term. This incentive and potential reward is to counter the higher risks investing in smaller companies entails.
How much tax could you save?
You could get up to 30% income tax relief, investing in VCTs and EIS.
Returns are also tax free. In the case of VCTs, these are normally paid as dividends. With EIS you can further benefit from potential inheritance tax relief and could defer capital gains from the sale of other assets.
Annual allowances are generous: £200,000 in VCTs and up to £2m in EIS. These could be valuable to investors caught by the restrictions on pension contributions.
Where to invest?
Here are some of the offers I would choose today. You can see more at www.wealthclub.co.uk and decide for yourself.
Octopus Titan VCT
The UK’s largest VCT has a great record of spotting and nurturing rising stars and achieving high-profile exits, including sales to the likes of Amazon, Google and Microsoft.
Zoopla, the first VCT-backed £1bn company, Secret Escapes and graze.com all received funding from Octopus Titan VCT.
ProVen VCTs
Among the UK’s longest-established VCTs, ProVen has a history of backing fast-growing businesses, often helping them expand internationally, and achieving profitable exits. Two recent examples are Watchfinder, the online marketplace for preloved premium watches, which was sold to Swiss luxury goods group Richemont SA, and Chargemaster, the UK’s largest electrical car charging firm, which was acquired by BP.
Fuel Ventures EIS fund
This fund is run by entrepreneur turned investor Mark Pearson, who famously started MyVoucherCodes with £300 and sold it for millions before he was 30. He now gives investee companies hands-on strategic and operational support, to help build their products and services and grow internationally. The current fund focuses mainly on “following the winners”, to use Mark’s words – companies he’s previously backed, which he believes show the best promise.
MMC Ventures EIS fund
One of the UK’s largest tech investors, MMC has been investing in technology for the past 20 years, way ahead of the curve. The EIS fund has helped scale up transformative businesses like recipe box delivery company Gousto and intelligent business information platform Signal AI.
An important caveat
Popular offers tend to come and go quickly. If you plan to invest in VCTs or EIS the sooner you act, the wider the choice. Leave it a couple of weeks and you might miss out.
IMPORTANT: This is a financial promotion issued by Wealth Club Ltd, authorised and regulated by the Financial Conduct Authority. It’s not advice nor a personal recommendation to invest. If unsure, seek advice. The products mentioned are high risk and illiquid and only for high net worth or sophisticated investors. Capital is at risk. Tax rules can change and benefits depend on circumstances.
Read more, watch video interviews and apply online at www.wealthclub.co.uk/cityam