rogerbu
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Post by rogerbu on Oct 21, 2015 15:40:00 GMT
I have a few VCT investments including Albion. In a recent Chairman's Statement for one of the VCTs, reference was made to two recent total write offs relating to companies in China. For one of these companies the MD ran off with the money and refuses to pay up. Apparently the authorities found no evidence of illegal behaviour. The tax relief and tax free dividends are very welcome, the operating costs and risks can be high. I am sure that this wasn't the VCTs I hold - Baronsmead 1&3, Maven 1-4, Northern 2, Octopus Titan, Proven & Unicorn AIM I agree with the comment (above) that Albion VCT's return (45-50% over 5 years) wouldn't attract me, Although Albion Managers have a number of VCTs with different profiles and historic return. I use Trustnet's VCT pages as a guide and I look for a historic 5 year return of 90-100% before including a VCT in my tracking list.
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james
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Post by james on Oct 21, 2015 18:19:09 GMT
I use Trustnet's VCT pages as a guide and I look for a historic 5 year return of 90-100% before including a VCT in my tracking list. You probably already know it but for others, that filter will eliminate from the list of candidates all of the lower risk asset-backed and early exit VCTs that are most comparable to asset-backed P2P. For this type, something around a third to a half or perhaps even more of the anticipated total return over five years comes from the tax gain that isn't included in the figure and even so the total return is not likely to get to 90%. As a filter for generalist VCTs with higher risk it's fine and the sort of thing I might also use for that purpose. Just depends on what you're looking for from the VCTs, the lower risk or average and up part of the range.
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upland
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Post by upland on Oct 22, 2015 6:45:19 GMT
Its probably worth mentioning that the HMRC online tax return website may be used to investigate the effects of VCTs on ones future tax liability. Obviously it cannot help with your current year but may give you a feel as to how your tax affairs could be modified in future. You can do a trial balance including some if you are preparing your current returns just to see what the effect would be.
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stevio
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Post by stevio on Oct 22, 2015 17:44:46 GMT
Do you just get 30% of the VCT investment off your tax bill or do they alter your tax bands like pension contributions?
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rogerbu
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Post by rogerbu on Oct 22, 2015 17:58:23 GMT
Do you just get 30% of the VCT investment off your tax bill or do they alter your tax bands like pension contributions? I think I answered this earlier in the thread. After all your normal tax calculations you owe HMRC £x for a tax year. Probably already paid via PAYE? The VCT tax refund reduces the £x by 30% of your VCT investment in the same tax year. It cannot go negative. e.g. Say your self assessment tax bill for 2015/16 is £6500. You buy £20,000 of VCT shares in the tax year 15/16. generating a tax refund of £6,000. Your tax due is now £500. VCT Tax Refunds are applied after all other calculations. If you are a higher rate tax payer, then the tax refund doesn't take you out of being a HR tax payer, it simply reduces your tax bill. If you have already paid the tax via PAYE, you get a refund after you complete the Self Assesment etc. If you have bought your VCT shares early in the tax year, in theory you can get a reduction in your Tax Code, which will reduce your monthly tax bill. I have never made this process work properly. ie this year I am due £3k tax refund so far, I requested a reduction in my Tax cade in June. HMRC has eventually reduced my Tax Code by 75, meaning that I will pay £750 less via PAYE this tax year. I will still have to claw back the remaining (£3k - £750) £2250 via my tax return along with all later VCT refunds.
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upland
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Post by upland on Oct 22, 2015 18:51:25 GMT
If you have bought your VCT shares early in the tax year, in theory you can get a reduction in your Tax Code, which will reduce your monthly tax bill. I have never made this process work properly. ie this year I am due £3k tax refund so far, I requested a reduction in my Tax cade in June. HMRC has eventually reduced my Tax Code by 75, meaning that I will pay £750 less via PAYE this tax year. I will still have to claw back the remaining (£3k - £750) £2250 via my tax return along with all later VCT refunds. Ditto , I just do it once a year online and leave it at that. Its quick its easy it works well and I know where I am. I have always found HMRC pretty good but communications are slow.
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james
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Post by james on Oct 22, 2015 20:52:57 GMT
Do you just get 30% of the VCT investment off your tax bill or do they alter your tax bands like pension contributions? If you use the tax return method that is what will happen. Alternatively you can ask them to adjust your tax code to give you the relief during the tax year. Since I'm trying to eliminate almost all of my income tax bill I prefer the second method because it avoids me paying a lot of tax unnecessarily just to get it refunded later. I can make money on that money instead of having it sitting with HMRC!
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Post by Financial Thing on Oct 23, 2015 13:59:14 GMT
I have to weigh in here....
If you like to gamble and can afford to lose the money, then put it all on 2 high risk platforms and go for broke. (I think you'll be sweating once a recession hits and default rates rise).
I think the more you can diversify the better and the more platforms you diversify over the better if you can stand fiddling with them all. I'm sure some of the "savers" over at Trustduddy are wishing they had diversified over a few more platforms. I wonder if I should be committed to an asylum for handing over money to strangers, hoping they act morally and legally. Unfortunately there are unscrupulous business people that exists in this world that won't hesitate to take advantage of those who trust too easily. Some of the p2p platforms are tiny so if a single Director were to fall ill or die, there is so many unknowns as to how this would affect investors in regards to how well the company would be run.
As far as VCT's, they are inherently risky and the returns don't stack up to the volatility involved. I was looking at a popular one a few weeks ago that had lost money over the last 5 years. Yes there might be some tax advantages but they don't outweigh the risk. These VCT's tend to get hammered during rough economic times and what people tend to miss are the high running costs and fees of these Trusts.
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stevio
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Post by stevio on Oct 25, 2015 22:16:04 GMT
With the Albion VCT, how do you know when in Nov they will start allowing investments again?
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james
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Post by james on Oct 25, 2015 22:44:30 GMT
With the Albion VCT, how do you know when in Nov they will start allowing investments again? ? I've found them to be helpful on the phone so if the boards have voted to approve a particular date they will probably tell you what it is.
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micky
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Post by micky on Oct 25, 2015 23:37:11 GMT
It might be worth having a look at Lending Crowd
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upland
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Post by upland on Oct 26, 2015 7:21:11 GMT
With the Albion VCT, how do you know when in Nov they will start allowing investments again? Hi Stevio Remember they are raising new shares so it will be announced and there will usually be a prospectus or Securities note. The shares are quoted on the LSE and they are the instruments that may be set against income tax. Try Google "VCTs available" and you will pick up all sorts. Its worth keeping an eye on some of the brokers that act as intermediates as they discount the initial commission and it has been cheaper to buy through them than the manager its self. There are usually some available for a large proportion of the year from somebody , the offer is usually open for some months. Many of the big financial brokers deal in them and can supply information. There is no actual "Albion VCT" , Albion is the new name of the old VCT manager from Close Brothers (Merchant Bank) It was spun off some years ago to form "Albion". Some other VCT managers did the same. Albion are well thought of and manage six VCTs with slightly different portfolios and histories all managed according to their principles and governance. Each of these VCT companies (a PLC) has a board or directors that is not the same as the Manager. (Although many are quite close with often managers on the board). The six Albion VCTs are Venture , Enterprise , Kings Arm Yard , Development , Tech and Gen ,and Crown. They have been around for many years , some since the middle 90s. Its important to understand all this otherwise you can buy into a situation that will take time to get out of.
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rogerbu
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Post by rogerbu on Oct 26, 2015 9:14:41 GMT
How to buy VCTs Once a VCT decides to raise new funds, it issues a prospectus and application form. You can apply directly with the VCT manager - this is usually the most expensive way. You can invest via an IFA and pay their charges If you are comfortable, you can invest via an execution only broker. There are a number offering the VCTs. Not all available VCTs will be being offered by all brokers. I have used Hargreaves Lansdown and Club Finance in the past with no issues. www.clubfinance.co.uk/Open-VCT.phpClub Finance is the cheapest I have found, and they (eventually) refund part of their annual commission from the VCT Manager. Anyone found a cheaper broker that have had good experiences with. There is a game to play - when to invest? when are share allocation taking place? when is the first dividend you will be entitled to? Which tax year do you want the Tax Refund to apply to? Option 1. Invest as soon as the prospectus becomes available. If the offer becomes fully subscribed, you have what you wanted However they will have had your money for some time - no interest Option 2. Wait till just before the first allocation of shares. The offer might become fully subscribed before. Option 3. Wait for an allocation just before the 'ex div' date. Cannot always get a positive allocation date from the manager More chance that offer will be fully subscribed Allows some short term investment of funds awaiting investment (hello Wellesley 30 day) Most efficient use of your funds whilst waiting for first dividend |
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james
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Post by james on Oct 26, 2015 14:31:59 GMT
There is no actual "Albion VCT" Well, none except the one called Albion Venture Capital Trust PLC ( AAVC share price history) which is the one I have always meant when writing "Albion VCT" here, as distinct from Albion VCTs meaning the whole set. Crown Place CRWN has less asset backing (not a 100% asset-backed investment policy like AAVC) but paying 11.16% a year in dividends might be of interest, it's the highest-paying of the set. Though not necessarily the highest return, just the one that has the highest current long term dividend plan.
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stevio
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Post by stevio on Nov 3, 2015 17:44:17 GMT
Just rang Albion and they were very helpful. They mentioned as well as being able to buy directly, you can also buy through clubfinance.com and H&L. They mentioned that clubfinance.com refund some of their trailing commission.
However I am guessing they both have an annual management fee that might outweigh the refunded commission?
Has anyone used either of these or another to receive a worthwhile discount?
PS - should I buy them in this month, November, which tax year would the relief apply to?
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