New Changes to Tax Efficient Investment Schemes

What do investors need to know about the changes to venture capital trusts and enterprise investment schemes? How do these changes affect investors’ portfolios?

Karen Kwok 14 January, 2016 | 11:40AM

Last summer adjustments were made to Venture capital trusts (VCTs) and enterprise investment scheme (EISs), causing existing investors to worry about the influence to their tax-planning solutions. 

Tax benefits of both schemes often attract people looking to offset the restrictions of pension lifetime and annual allowances. While the tax benefits are far reaching, VCTs and EISs investment in small companies and start-ups, so investors need to bear in mind this comes with a higher risk of loss of capital than investing in established large cap equities. Only experienced investors with well diversified portfolios should invest in VCTS – and allocate a minor portion of their investable wealth in these products.

Investors’ Tax Relief Remains Unaffected

Established small companies who still want access to capital from VCT schemes will lose out but others are largely unaffected, and tax reliefs and product features remain same for investors, Jason Hollands, managing director of Tilney Bestinvest says.

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About Author

Karen Kwok

Karen Kwok  is a Reporter for Morningstar.co.uk

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