Investments  

Death of renewable VCTs exaggerated: Power

Responding to claims that new rules announced last week in the Budget would spell difficulties VCTs, the chairman of provider Sustainable Technology Investments Ltd, said his firm’s investment strategy would not be affected.

In his Budget announcement, Chancellor George Osborne said the government intended to change the rules governing VCTs, to exclude investment in products which benefited from “contrived” government income guarantees and incentives.

The announcement prompted Jason Hollands, managing director of business development and communications for London-based Bestinvest, to claim that VCTs, particularly those which focused on renewable energy, and used renewables obligation certificates or the renewable heat incentive, could face difficulties.

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Among those which could face problems were the STIL sustainable technology share pool on the Elderstreet VCT, but Mr Power claimed the investment strategy would be unaffected by the Budget announcement.

He said: “Our investment strategy pursues investments in anaerobic digestion and hydroelectricity projects, both of which receive feed in tariffs which were unaffected by the Budget.

“Furthermore, through existing company investments in Blackdog Biogas Ltd and River Generation Ltd, which have already received HMRC clearance, STIL has projects available for immediate investment.

“The Budget changes relating to the renewables incentives appear to be directed at solar PV and wind assets, which received renewable obligation certificates rather than feed in tariffs.

“We will be keeping abreast of the situation as further details become available.”

Mr Hollands also warned that the Foresight Solar VCT and Ventus VCT could also be affected, in addition to other broader-based and limited life VCTs, which occasionally invested in the sectors.

When asked, a spokesman for Foresight Group declined to comment on the Budget announcement.

However, Matthew Ridley, vice-president and investment manager at Ventus VCT, said: “For our current offer, we are planning to invest in hydro projects, so on the face of it we are not affected. However it could be challenging in the future to invest in wind because of these rules.”

Adviser View

Ian Lowes, managing director of Newcastle-based advisory firm Lowes Financial Management, said: “Quite a few of the renewable VCTs make use of renewables obligation certificates, as an income stream in conjunction with the general sale of electricity.

“The launch of renewable VCTs in the future will be difficult given the very narrow range of renewable investments that will remain eligible.

“However, the change is a common sense move that will help to further remove anomalies, which when exploited serve to give already tax incentivised solutions additional benefits.”