An Adviser’s Guide to VCT
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An Adviser’s Guide to VCT
A clear and impartial resource for advisers and paraplanners who want to get an understanding of the rules and regulations surrounding VCT investments, including all the latest technical and legislative aspects of VCT investing.
What you'll find inside
Practical Guidance
Detailed overview of the types of estate planning methods and the technical complexities to be aware of
Case Studies
Real-life examples of when and how the various estate planning options can be used and what they can achieve
Thought Leadership
Contributions from experts in the VCT world on some of the most technical aspects of investing in VCTs
CPD Accreditation
Our guides are accredited by the CISI, CII and PFS. Give us feedback and don’t forget to claim your CPD!
Consistent high demand for VCTs reflects the growing recognition of the benefits they provide to investors.
IAN SAYERS, CHIEF EXECUTIVE, ASSOCIATION OF INVESTMENT COMPANIES
Learning objectives
» Apply the main rules and practicalities that govern the VCT reliefs available.
» Explain the main risks associated with VCT investments.
» Define the key aspects that need to be taken into account when considering client suitability for a VCT investment.
» Evaluate the main considerations for a VCT investment and investment provider.
» Conduct discussions for claiming EIS tax reliefs.
» Evaluate the main considerations for an EIS investment and investment provider.
» Access planning examples that can apply to real-life situations.
» Ascertain the circumstances in which VCT reliefs can be withdrawn.
Acknowledgements
A publication like this is rarely the product of one organisation’s efforts; to ensure that it is up to date, comprehensive, accurate and captures all of the key issues requires a wider input. We’ve had plenty of help producing this Guide and would like to thank David Brookes, Sarah McGuffick, Ian Sayers and Rhodri Whitlock, who have contributed their thoughts to this Guide.
We would also like to thank our partners: Amati Global Investors, Blackfinch Ventures, GrowthInvest, NVM Private Equity, Octopus Investments and Seneca Partners. It would not be possible to produce educational material like this without their generous support and contribution towards the production, printing and distribution of the guide.
Brief Overview
Venture Capital Trusts (VCTs) raised £731 million in 2018/19 – the second highest amount since their inception, meaning they continue to be a vital source of tax-efficient investment into UK small businesses. With such strong interest, we believe the time is ripe to provide advisers with a clear and insightful explanation of the rules and operating structures surrounding VCTs
Recent government changes mean that there is now a greater focus on higher-risk investments, and as interest in the market continues to rise, understanding VCTs is more important than ever.
This Guide takes a practical, impartial look at VCTs to give advisers and paraplanners the confidence to discuss the potential benefits and pitfalls of this market with their clients.
The funding that VCTs provide is key to maintaining UK Plc’s reputation as a key innovation hub.
RHODRI WHITLOCK, ASSURANCE & ADVISORY PARTNER, HEAD OF FINANCIAL SERVICES AND ASSET MANAGEMENT, CROWE UK
Comments on EIS
Key information documents’ performance scenarios are overly-optimistic for many products, even in supposedly ‘unfavourable’ and ‘moderate’ conditions.
Sarah McGuffick, Lead Regulatory Policy Adviser, PIMFA
The VCT industry has adapted well to the changes
David Brooks, Tax Partner, BDO
Partners
Amati Global Investors is a specialist investment management business based in Edinburgh, and focussed on investment in small and mid-sized companies in the UK. Amati manages the TB Amati UK Smaller Companies Fund, an open-ended fund which invests in companies quoted on the Alternative Investment Market (“AIM”) as well as fully listed companies including constituents of the Small Cap and Mid 250 indices. Amati also manages two Venture Capital Trusts – Amati VCT and Amati VCT 2 – which are primarily focussed on companies quoted on AIM, but also makes some investments in private companies where the managers believe that either an AIM flotation or a trade sale will occur within 24 months.
Blackfinch Investments is an established and experienced manager in the UK market for tax efficient and capital protected investments. Blackfinch specialise in Inheritance Tax mitigation through Business Property Relief (BPR) for both individuals and corporate entities, Enterprise Investment Scheme (EIS) Portfolios and also Seed EIS (SEIS) Portfolios. With a focus on capital preservation, Blackfinch look to protect investor capital through asset backed investment strategies in sectors such as property, lending, renewable energy and media. Underpinning this investment strategy is a first class client services and intermediary support team based in both London and Malvern, Worcestershire. Their approach embodies the Blackfinch philosophy: efficient client-focused solutions delivered in a simple and transparent way.
GrowthInvest is a unique,
independent platform which provides
access to tax efficient investments
to a growing network of UK financial
advisers, wealth managers as well
as investors. The Platform aims to
bring the advantages of early stage
investing to a wider audience of
investors and advisers, who are
in a position to benefit from the
higher returns these companies
potentially offer and tax efficiency
via Government-sponsored schemes.
The purpose-built technology allows
clients to consolidate, control, build
and enhance their investment
portfolio within a single, secure
online portal.
We have been helping UK businesses to grow since 1984
We are a long-established investor focused on the UK regions, primarily targeting small management buy-outs and growth investment in businesses that are led by high quality incumbent management teams.
We own our business and personally invest alongside our funds. That means we have a personal stake in the success of the businesses and teams in which we invest.
In summary, we have the capital, contacts, expertise and track record to be a supportive partner and engaged investor.
Octopus is a very different type of investment company. Whether you’re a financial adviser, an investor looking for tax-efficient ways of investing in the UK’s smallest and most dynamic businesses, or a company seeking finance for growth, we’re here to help. By putting your needs first, by listening and really understanding what you want, we can help you do smarter things with your money.
We manage nearly £5billion for over 50,000 customers. We offer straightforward products which solve problems faced by real people. We don’t believe in unnecessary complexity and only launch products when we’re confident they’ll do what we say they will. We’re working hand-in-hand with some of the UK’s most successful entrepreneurs and management teams, financing companies capable of creating, transforming or dominating markets. Exceptional customer service and clear communication are integral to everything we do.
At Octopus, we’re building the best team possible. We hire the most talented people we can find, from both inside and outside our industry.
Seneca is an independent investment management and corporate advisory business for High Net Worth individuals and SMEs. We have truly achieved our aim of becoming a home for SMEs where companies and entrepreneurs can access invaluable support and opportunities.
Our team brings together decades of success in providing bespoke investment and advisory solutions for our clients across a multitude of financial areas.