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.
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The value of investments can go down in value as well as up, so you could get back less than you invest. It is, therefore, recommended that you seek full, personal advice in respect of your needs where all appropriate risks will be explained.