Personal Finance

Investors rush to tax-saving funds as three hit full capacity


Three funds that are used by investors to limit income tax have already reached capacity with seven weeks left until the new tax year.

Venture capital trusts (VCTs) are listed funds that offer a 30pc tax break for investing in riskier private companies. Savers can put in up to £200,000 per tax year, but must not sell within five years. Funds offer tax relief only on new shares so the offers are often oversubscribed.

Mobeus VCTs have raised the full £58m they offered and have now closed. Albion VCTs (£34m) and Maven VCTs (£15m) are also shut.

Others funds are close to reaching capacity. Octopus Apollo VCT is 83pc full while Northern and Baronsmead have raised three quarters of their limits.

However, Unicorn has opened this week and aims to raise £25m, giving investors a fresh option. Darius McDermott of research firm FundCalibre said its manager, Chris Hutchinson, was experienced and its holdings in companies such as fund shop Interactive Investor made it a strong option.

How much money VCTs have raised so far

Octopus Titan, the largest VCT on the market, which boasts former successes such as Zoopla, Secret Escapes and Graze, is less than half full with £93m of capacity remaining.

Alex Davies of Wealth Club, a broker, said: “If a VCT is going to find the next Facebook, it’s this one.”

The market has been slow to pick up this tax year as Brexit has made investors nervous about owning smaller businesses.

Many VCTs also delayed announcing how much capacity they would have. However, demand picked up after the election and as the new tax year approaches.

Mr Davies said: “VCTs are one of the last tax-efficient ways left to invest, with pension restrictions for higher earners and a lifetime allowance of just over £1m.”


Child Trust Funds saved from potential tax hit after Government steps in

Previous article

Bank fined for not passing on customers' money: how to trace lost cash

Next article

You may also like


Leave a reply

Your email address will not be published. Required fields are marked *