VCT popularity has providers wishing for more of the same
VCT providers have hailed a year of “healthy inflows” as several offerings were over-subscribed in the 2011/2012 tax year.
Paul Latham, managing director of Octopus Investments, said he was hopeful that VCTs would remain popular next year despite more favourable investing conditions being created for enterprise investment schemes.
His comments came after the Octopus Titan VCT 1-5 Top Up Offer raised £6.25m reached its fund-raising target.
Mr Latham said: “We have continued to receive healthy inflows into our VCTs this year and due to significant demand we had to close our Octopus Titan VCT ahead of the tax year-end. Although we expect investors to quickly make use of the more favourable incentives that will be available through EIS from next tax year, following the government’s decision to double the limit on the amount an individual can invest into an EIS, our experience suggests this will not make VCTs the poor relation. Instead, we think that the government’s efforts to limit Maximum Investment Plans and stamp down on tax avoidance, has given another welcome boost to both VCTs and EIS as legitimate tax-efficient vehicles.”
The Baronsmead VCT 2 Plc, Baronsmead VCT 3 Plc and Baronsmead VCT 4 Plc, launched in January, were fully subscribed 18 working days after launch, raising £16.54m altogether. Others have come in close to target or are accepting less than first thought.
Hugh Rogers, business development director for Shore Capital, which runs the Puma VCT 8 Plc, said it was currently at £10m, despite a target of £30m.
He said: “If we end at £15m will be happy. Once it gets over £10m it is certainly a viable size.
“We are happy to raise a VCT every year. We run limited life VCTs, after shareholders hold it for five years they can put their shares into liquidation.”
The Albion VCTs Linked Top Up Offer, which expires at the end of May, has raised £7.4m, close to its target of £15m.
Will Fraser-Allen, deputy managing partner for Albion Ventures, said: “We are making steady progress with the Albion Linked Top Up Offer and expect to raise around £10m once the offer closes at the end of May.
“The VCT market is likely to be somewhat smaller than last year at approximately £250m compared with around £350m last year.”
Richard Allen, a consultant for the tax shelter report run by London-based Allenbridge Personal Investing, said: “Some offers have struggled but others have closed early due to hitting their targets. It shows there is still significant appetite for VCTs despite the economic conditions. The Budget has made a number of tweaks that may make VCTs work a bit differently but that will not affect those that already have raised funds.”