Frank O'Donnell

In the recent economic downturn, Venture Capital Trusts (VCT) have suffered a downturn. However, it is expected to pick up as the tax-year end approaches.

Promoters of tax-efficient venture capital trusts (VCT) are hoping for a much better fund-raising season than in the 2008-2009 tax year. Subscriptions to new VCT shares slumped to £156 million compared with more than £200 million in each of the two previous years.

Tighter restrictions on pension contributions and the new 50% income tax from 6^th April 2010 will encourage wealthier investors to take a renewed interest in VCT’s.

VCTs offer not only 30% upfront income tax relief, but also the prospect of tax-free income and capital distributions over the long term.

In contrast, pension contributions of more than £30,000 a year are already limited to basic-rate tax relief if HM Revenue & Customs deems it to be above an investor’s norm, and tax relief is scheduled to be restricted to the basic rate for all pension contributions for those with annual incomes exceeding £150,000 from April 2011.

Another reason for the VCT industry’s optimism is the improved investment climate. This has helped restore the historic returns of the better VCTs to levels that are more likely to encourage support.

Would you like more information on Venture Capital Trusts (VCT’s) or would like to learn ways in which you can invest in VCT’s, please contact me for a chat on 0131 331 4191 or email info@p3wealth.co.uk