127tolmers wrote:I have been dithering for some time, but, with a bit of prodding from my wife, we have decided, after 15 years of VCT subscriptions, to cease further new VCT purchases, and our DRIS mandates have been rescinded.
Why? Well, partly because the performance has deteriorated since the last major change in VCT regulations, and partly because, being both in our mid-seventies, we think it is time to simplify our financial affairs. And we will gradually sell off the 5-year expired VCTs. Already Artemis and Chrysalis have got there before us!
We'll miss the Tax rebates
Scotia, I have no intention of offering financial advice and you make a good point on performance. However VCTs are pretty simple to administer, no tax, no tax returns, no CGT issues and can be passed to surviving spouse or descendant with all these tax benefits continuing (if below £200k per recipient). Tax relief claimed on purchases inside 5 years is not clawed back on death. However VCTs are no exempt from IHT.
This appears to be different to EIS where while tax relief on purchase inside 3 years is not clawed back, but on transfer to surviving spouse or descendant CGT relief and income tax loss relief is not passed on. It is likely that EISs held for more than 2 years may fall outside IHT.
DYOR
Many thanks for the comments.
I said I was dithering - so the pros and cons are not 100% in either direction. But we are getting older, and simplification for ourselves (and potential inheritors) makes some sense. And with the ISA level now raised to £20,000 each, and further offloading to potentially exempt transfers, there is no longer a need to consider VCTs for any surplus funds. So unless there was a significantly better performance by VCTs vs conventional investments in an ISA, then VCTs are no longer attractive. And an additional annoyance with VCTs has been the sale of certificated shares (to maximise the tax gain from 5 year holdings) - first Charles Stanley Direct introduced whopping charges, and now Hargreaves Lansdown seems to be problematic. I.E. more nuisances which we could well do without.
So we will grin and bear our tax bills this year - making a very small contribution to the amount that the chancellor will need to raise.