The reduction in the pension lifetime allowance from £1.25m to £1m has brought more interest in other forms of tax-efficient investment, such as venture capital trusts and enterprise investment schemes, Patrick Reeve has said.
The managing partner of Albion Ventures said the firm had already seen more advisers seeking to offset the cut in the LTA and expected more interest in the weeks following the pension changes.
“We have already seen a substantial increase in investor interest in VCTs following earlier reductions in the pension lifetime allowance and enquiries following the changes to annuities, and expect this additional reduction to pension lifetime allowance to further boost demand.”
In a survey among advisers, Albion found that 29 per cent expected the LTA to be cut again in the next term of government.
However, 32 per cent believed that clients would be more interested in VCTs as a result of the cut to the allowance.
Advisers responding to the survey also estimated that roughly 15 per cent of their clients who were approaching retirement were expected to breach the £1m limit.
He added: “This new reduction in LTA means that IFAs will increasingly be advising more of their clients to invest in a broader range of tax-efficient pension supplements.”
Adviser view
Ian Warwick, managing director for Cheshire-based Deepbridge Capital, said: “Tax reliefs are available in order to reward investors for providing funding, which growing companies may otherwise struggle to attract.
“If there were no risk, there would be no tax relief. It is as simple as that.”
