Jump to content
DOSBODS
  • Welcome to DOSBODS

     

    DOSBODS is free of any advertising.

    Ads are annoying, and - increasingly - advertising companies limit free speech online. DOSBODS Forums are completely free to use. Please create a free account to be able to access all the features of the DOSBODS community. It only takes 20 seconds!

     

VCTs


Frank Hovis
 Share

Recommended Posts

Frank Hovis

I got into these about 2002 when Gordon Brown, bless him, raised allowable tax relief on these to 40%. Good man.

They are usually regarded as "high risk" but the experience of the investor and the spread of companies in which they invest, plus sensible exit strategies and reinvestment, means that I don't really think that they are. It's far more risky being in half a dozen FTSE 100 shares.

Tax rules: You pay the full amount and it is up to you to include them in your tax return to get the relief paid to you by HMRC.  You have to hold them for five years or you will have to pay back this relief.

Dividends are paid tax free and don't even have to be declared on your tax return. They are a very nice regular cash receipt.

Yields are typically 5 to 7% initially but some of my older ones are now better than 10%.  And this is against the 100% cost, if you had full tax relief then recalculate that return against a 70% cost.

All sounds great, and my experience has been excellent.

Downsides:

Tax relief now capped at 30%.

Gideot hugely tightened the qualifying investment rules so there are far fewer options to buy, one of my favoured ones was fully subscribed in less than a week.

I am unclear of the very long term; all of my VCTs have done extremely well but whether this will continue indefinitely I don't know.

 

I won't make any particular recommendations as I've stuck with the same two managers all the time and they've done very well for me. I don't know enough of the market to say whether there are better ones out there.

  • Agree 1
Link to comment
Share on other sites

Inoperational Bumblebee

Would you be willing to mention the managers?

Whatpercentage of your portfolio do they consist of? Is this something you'd wait until you have a substantial portfolio to do, or a substantial income?

Link to comment
Share on other sites

Frank Hovis

It's about a sixth and I'm entirely comfortable at that level.  I would regard them as a longer term investment so in addition to the minimum five years for tax reasons I'd say a further five at least. I have no intention of selling as the dividends are so good.

Though IIRC Miserable Pig had about all of his money invested in them and was happy with that.

I'm not mentioning the managers as people will take that to mean that they're the best whereas they'd be better off reading an independent guide.

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

 Share

  • Recently Browsing   0 members

    No registered users viewing this page.

×
×
  • Create New...