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Neo
Saving Enthusiast
Joined: 24 Oct 2004
Posts: 147
Cash Points ££ 595.04
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 Posted: Mon Mar 07, 2005 12:53 pm Post subject: VCT - Venture capital Trusts - 40% tax back ! |
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As the tax year draws to a close - remember that you get 40% back on your investment in VCT's for 04/05 . Even IF your a 22% tax band payer you still get back 40% !
What are VCT's ?
They are similar to investment trusts, but have to operate under strict rules, about the types of companies they can be invested (high risk, tiny cap).
Okay VCT's are high risk ! so you should not commit more than say 3% of your portfolio. Still the 40% tax incentive is mighty enticing ! Pick a good one and you will get some growth.
Want a tip ?
A general fund, rather than a specific sector should do well. also use discount brokers such as cavindishonline to get your commission back.
I'm leaning towards one of the close brother funds. |
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Deborah
Veteran Investor
Joined: 12 Jul 2004
Posts: 418
Cash Points ££ 1730.36
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| Posted: Mon Mar 07, 2005 3:42 pm Post subject: |
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VCT's are very, very high risk !
Yes you get 40% tax back (if you have paid enough tax in the year), but the chances are that you will have a capital loss at the end of 3 years, and also they are very illiquid, it is very hard to sell your position.
Since who is going to by a second hand VCT share when they can get a new one with a 40% discount ? |
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Neo
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Joined: 24 Oct 2004
Posts: 147
Cash Points ££ 595.04
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| Posted: Mon Mar 07, 2005 9:16 pm Post subject: |
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True they are very, very high risk
Still the 40% tax refund is very enticing ! 
Obviously they are a long-term investment and given the risk you should not invest more than 3% or so of your portfolio in them |
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fireboy
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Joined: 18 Oct 2004
Posts: 134
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| Posted: Mon Mar 07, 2005 9:18 pm Post subject: |
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| The VCT's have to be kept for a minimum of 3 years, if you sell early you have to give the 40% tax break back to the Inland Revenue. |
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Neo
Saving Enthusiast
Joined: 24 Oct 2004
Posts: 147
Cash Points ££ 595.04
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| Posted: Tue Mar 08, 2005 12:00 am Post subject: |
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Yes they have to be kept for a minimum of 3 years to enjoy the tax breaks, and preferbly longer, but the potential rewards are good relative to the risk and the tax break.
Remember I am talkign about risking no more than 3% of your portfolio on them  |
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Guest
Cash Points ££ 15.00
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| Posted: Tue Mar 08, 2005 12:10 am Post subject: |
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What happens to the VCT's after 3 years ?
Thanks |
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Neo
Saving Enthusiast
Joined: 24 Oct 2004
Posts: 147
Cash Points ££ 595.04
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| Posted: Tue Mar 08, 2005 12:11 am Post subject: |
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After 3 years they basically become investment trusts.
If they have performed well then they will be liquid enough to trade i.e. there will be a demand to invest into them.
If they have performed badly than the bid / offer spreads will be very wide, hence a loser. |
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