That’s ten to fifteen years during which such clients could benefit from making regular VCT investments, which represent another tax-efficient way to invest for retirement. Multiply that by the growing number of clients affected by the lifetime allowance, and you can see why it’s worth the time researching VCTs so that your firm is in a position to recommend them to clients who could benefit.
VCTs can also be a useful planning tool for clients who own a business. The rules on dividend taxation mean entrepreneurs who pay themselves through dividends could face higher tax bills if they want to increase the dividend they pay themselves. Investing in a VCT could be a way to offset these costs, and therefore help clients extract money from a business tax efficiently.
Clients who are landlords may also benefit from investing in a VCT. Recent rule changes, such as the removal of mortgage interest tax relief, have made it more important for landlords to consider the tax implications of investment properties. For some landlords, a VCT investment may be a good way to offset some of the tax they pay on their rental income.
Identifying clients who could benefit from tax-efficient investments
Tune in to the Octopus Online Show on Thursday 5 November at 10am for a tax planning special.
We’ll be looking at areas of opportunity in advisers’ client banks and how tax-efficient investments can help clients in a variety of situations.
You’ll also hear from other financial advisers about the role these types of investments pay in their own clients’ planning.
For more information, and to reserve your place, go to octopusinvestments.com/estate-planning-show-episode-5/.
Jessica Franks, Head of Tax
*Tax Efficient Review, April 2020.
VCTs are not suitable for everyone. Any recommendation should be based on a holistic review of your client's financial situation, objectives and needs. We do not offer investment or tax advice. Issued by Octopus Investments Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 33 Holborn, London, EC1N 2HT. Registered in England and Wales No. 03942880. We record telephone calls. Issued: October 2020. CAM010117-A.