james
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Post by james on Sept 2, 2015 15:02:06 GMT
Of the Albion VCT range you'll find that the one called specifically "Ablion VCT" filled it's quota early. The rest will close at the end of this month, though one more might fill earlier. You can phone them on the free number in the back of the application pack to check the current statuses. Albion VCT is expected to reopen around November with a new 2015/16 offering and the rest in the new year. There are usually discounts of 2-3% available at the time new offers are made, none now available on the 2014/15 one that will close at the end of this month.
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debeast
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Post by debeast on Sept 3, 2015 7:41:24 GMT
james Thank you thats very useful. I think that like P2P it is probably worth my while diversifying over a half dozen VCTs to make sure should 1 fail it doesn't take the lot ! I'm also hoping i can pick your brain a bit more as this is something i'm new to? If yes then read on  Q1) Say i have a tax bill of 10k so i invest 30k and thus pay no tax (im rounding the 30%) I hold for 5 years to get the benefit What do i do with the 10k i was going to give the Gov ? Use it to hedge the VCT? ie stick it in the FTSE100 tracker for 5 years? OR Q2) Can i do this every tax year? Q3) The discounts offered do they mean i'm effectively getting a 35% boost (if the discount was 5%)? Q4) Which platform to use to buy? Thank you /beastie
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james
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Post by james on Sept 3, 2015 10:55:15 GMT
1. If you're on PAYE tell HMRC and they will adjust your tax code to give you what relief is possible that way, any extra is done with a tax return, as it is also if you have no PAYE income. How you invest it is up to you. Personally I don't think that this is a great tie to be investing in most stock markets so would prefer P2P.
2. You can do it whenever you have any income tax bill.
3. As well as a discount there is normally an offering initial charge so you really are more likely to end up with 28% than 35%.
4. Whatever one offers you the best discount. You'll get share certificates sent to you by the VCTs.
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bigfoot12
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Post by bigfoot12 on Sept 3, 2015 11:34:39 GMT
I don't think that VCTs are obviously good investments. There are reasons why the government has to offer 30% tax credit to persuade people to invest. The charges can be high and can take quite a bit of that 30%. The last five or six years have been very benign for VCTs, with low interest rates and money flocking to this sector. You need to look at returns much longer than five years. I have several colleagues who have been doing these for a while and most of them regret it. Watch out in the literature as returns often include the 30% tax credit, i.e. they assume your purchase price is £0.70 in the £1. When you sell you will probably get a price significantly below net asset value. I think like P2P is probably worth my while diversifying over a half dozen VCTs to make sure should 1 fail it dosen't take the lot ! I doubt that you will find six you like at the moment. As james said most will start opening their offerings later in the (tax) year. Q1) Say i have a tax bill of 10k so i invest 30k and thus pay no tax (im rounding the 30%) I hold for 5 years to get the benefit What do i do with the 10k i was going to give the Gov ? Use it to hedge the VCT? ie stick it in the FTSE100 tracker for 5 years? So tax credit on £30k would be £9k. Not sure that FTSE100 would count as a hedge, might count as further diversification if that is what you meant. Your real risk with the tax credit is that VCT status might be withdrawn in which case you would need to pay it back and in that situation selling the VCT would be hard. Other than that you can do what you like with the money. Q2) Can i do this every tax year? Yes, there is an annual limit, which I can't remember but it is reasonably large. Q3) The discounts offered do they mean i'm effectively getting a 35% boost (if the discount was 5%)? No it is normally a discount to the initial charges which can be large, 6% seems typical. So with a 3% rebate you would be getting a 27% boost rather than 24%. |
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james
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Post by james on Sept 3, 2015 14:33:23 GMT
I don't think that VCTs are obviously good investments. Like P2P they vary from the higher risk early stage businesses like much crowdfunding to the secured types like P2P lending. The Albion VCT is a hair under 100% secured, with a Gatwick airport hotel its largest single holding. It pays 10% tax free on the amount actually invested, which means after allowing for the 30% tax benefit. Crown place, the other one that is likely to fill before the end of this month, pays 11% but isn't fully asset backed, something like 50% if I recall correctly. New VCTs aren't allowed to hold many of the things in the Albion-run VCTs because they are considered too low risk. You need to look at returns much longer than five years. I have several colleagues who have been doing these for a while and most of them regret it. Really depends on what they have been investing in, there's a huge variety from highly speculative new biotech firms to secured lending. Watch out in the literature as returns often include the 30% tax credit, i.e. they assume your purchase price is £0.70 in the £1. When you sell you will probably get a price significantly below net asset value. Yes, including the tax credit is normal though the ones I've seen give the figures before and after that. The VCTs run by Albion have been buying at a discount to NAV at selling time of about 6%. Since then they have introduced a 5% discount policy, so you'll get 95% of the NAV at the time you sell, which will hopefully be above the one when you buy, even though VCTs typically pay out most gains in the form of their tax free (for all tax rates) dividends.
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bigfoot12
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Post by bigfoot12 on Sept 3, 2015 19:44:13 GMT
I don't think that VCTs are obviously good investments. Like P2P they vary from the higher risk early stage businesses like much crowdfunding to the secured types like P2P lending. The Albion VCT is a hair under 100% secured, with a Gatwick airport hotel its largest single holding. It pays 10% tax free on the amount actually invested, which means after allowing for the 30% tax benefit. Crown place, the other one that is likely to fill before the end of this month, pays 11% but isn't fully asset backed, something like 50% if I recall correctly. New VCTs aren't allowed to hold many of the things in the Albion-run VCTs because they are considered too low risk. You need to look at returns much longer than five years. I have several colleagues who have been doing these for a while and most of them regret it. Really depends on what they have been investing in, there's a huge variety from highly speculative new biotech firms to secured lending. Watch out in the literature as returns often include the 30% tax credit, i.e. they assume your purchase price is £0.70 in the £1. When you sell you will probably get a price significantly below net asset value. Yes, including the tax credit is normal though the ones I've seen give the figures before and after that. The VCTs run by Albion have been buying at a discount to NAV at selling time of about 6%. Since then they have introduced a 5% discount policy, so you'll get 95% of the NAV at the time you sell, which will hopefully be above the one when you buy, even though VCTs typically pay out most gains in the form of their tax free (for all tax rates) dividends. I agree with what you say in this post. The Albion VCT has been paying out 5p a year per share for a while (which equates to the 10% of net investment you claim). However the year before last (FYE 2014) it made a 2p total return, so more than half of that dividend was in effect your own capital being paid back. 2013 and 2012 seem to be similar. (This isn't necessarily bad as you are getting your capital back at par and you bought it for a discount, but it needs to be considered.) I would add that in the case of Albion the fees appear to be lower than my example, perhaps fees have improved over the years. One thing I would add which fits well with what you say is that there have been very significant changes over the years so it is hard to compare VCT performance of 10 years ago with that of now.
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james
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Post by james on Sept 3, 2015 20:07:04 GMT
One problem with year to year returns is that disposals of investments don't happen every year, so it's to be expected that there will be years when returns are less than required to cover the dividend. Still, for that particular VCT, large bonus dividends on disposals shouldn't be expected because that's not what it's trying to deliver, it's after the steady and predictable payments. Personally I assume that there may be a 1-2% a year shortfall overall. Allowing for both buying and selling values, if sale happens after five years. Lower the longer the holding time is. So that might use up to 10% of the 30% discount, leaving perhaps 20% of the full purchase price as tax profit plus the annual income. That 20% would be 28% of the net purchase price, say, so not a bad gain overall.
Back in late March 2015 I bought a bit of all of the Albion run VCTs, £1k of most but 14k of the Albion VCT. Quoted values today are 9.27% below the purchase price. Mostly the initial charges which weren't discounted much when I bought because it was too late for the bigger discounts. That's been gradually improving and the set is up 1.4% since the 1 May valuation. Though the property valuations are only done annually so there will be a bump up or down from them at some point. A bit of that 1.4% wil be retained interest for dividend payments, which are done every six months for each VCT, with each using a different month set so one pays each month.
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stevio
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Post by stevio on Sept 4, 2015 7:58:56 GMT
Hi James, where would I start with finding out about and doing some research on VCTs please?
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james
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Post by james on Sept 4, 2015 10:03:21 GMT
You could do worse than initially looking at the Albion 2014/15 page and reading the two independent reports from Tax Shelter Report and Tax Efficient Review. Then move on to reading the full documentation set from first to last so you can see in more detail what's described. After that you should be in a better position to put other VCT offers into context. |
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bigfoot12
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Post by bigfoot12 on Sept 12, 2015 12:59:38 GMT
...and if Corbyn wins twice.... All bets will be off, because hell will have frozen over. One down, one to go ....
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Post by brettb on Sept 13, 2015 14:07:22 GMT
I've been in BTL since 2006. I only own a single property and it's horribly tax inefficient to not live in your only residence, but at least I have flexibility in where I live and work.
Renting out the property has been really easy - small single flats don't even need to be advertised in SE England (or other desirable locations). My usual void period is a week.
On the downside there are lots of one off costs (new boiler, new bathroom etc. etc.). And again BTL isn't hugely tax efficient.
Do the math and I was probably better going more into P2P.
A good way to make big money in BTL is to buy at auction during downturns, like my old landlords did in 2009.
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adrianc
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Post by adrianc on Sept 14, 2015 8:20:11 GMT
All bets will be off, because hell will have frozen over. One down, one to go .... Easy thing down, very very hard thing to go. With a very low bar to entry, a quarter of a million people dived in there and said "Jez we can!". So let's be bold and say there's twice that number in the country that actually think it... And, if he does bring a lot of previously non-voters to the polling booths, they'll mainly be in already Labour safe seats.
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adrianc
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Post by adrianc on Sept 14, 2015 8:23:09 GMT
A good way to make big money in BTL is to buy at auction during downturns, like my old landlords did in 2009. A really good way to lose big money is to buy a house at auction unless you REALLY know what you're letting yourself in for. Your landlords were very lucky.
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