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  • FIRST POST
    • GooeyBlob
    • By GooeyBlob 12th Aug 17, 2:49 PM
    • 164Posts
    • 220Thanks
    GooeyBlob
    Secondhand VCT Shares
    • #1
    • 12th Aug 17, 2:49 PM
    Secondhand VCT Shares 12th Aug 17 at 2:49 PM
    Does anyone know if there are specific rules on acquiring secondhand VCT shares? I'm aware of the £200K limit on new issues - not that I'd ever get anywhere near that - but haven't seen anything on the HMRC website or elsewhere that might suggest there would be restrictions on putting, say, £20K into 3 or 4 different secondhand VCT stocks in a single tax year.

    I'm guessing there aren't?
    Saved many thousands of pounds over the past decade by brewing my own booze.
Page 1
    • Linton
    • By Linton 12th Aug 17, 2:54 PM
    • 8,636 Posts
    • 8,611 Thanks
    Linton
    • #2
    • 12th Aug 17, 2:54 PM
    • #2
    • 12th Aug 17, 2:54 PM
    Second hand VCT shares dont provide any tax benefits so I dont see why HMRC would care.
    • bigadaj
    • By bigadaj 12th Aug 17, 4:42 PM
    • 10,803 Posts
    • 7,100 Thanks
    bigadaj
    • #3
    • 12th Aug 17, 4:42 PM
    • #3
    • 12th Aug 17, 4:42 PM
    Does anyone know if there are specific rules on acquiring secondhand VCT shares? I'm aware of the £200K limit on new issues - not that I'd ever get anywhere near that - but haven't seen anything on the HMRC website or elsewhere that might suggest there would be restrictions on putting, say, £20K into 3 or 4 different secondhand VCT stocks in a single tax year.

    I'm guessing there aren't?
    Originally posted by GooeyBlob
    Why would you want to?
    • bowlhead99
    • By bowlhead99 12th Aug 17, 5:31 PM
    • 7,000 Posts
    • 12,612 Thanks
    bowlhead99
    • #4
    • 12th Aug 17, 5:31 PM
    • #4
    • 12th Aug 17, 5:31 PM
    They limit what you can buy of new issues because they give you 30% tax relief to help fund that, so they are not going to let you do it on millions a year because you don't need a special incentive to invest in risk assets if you have that sort of available capital.

    For secondary purchases you don't get that initial tax relief, the tax benefit of owningI second-hand VCT shares is just that dividends and capital gains from your shares will be tax free. But they were already tax free when their previous owner owned them, so it doesn't cost HMRC anything for them to be moved into your own ownership; and having a bouyant secondary market is something that promotes people being willing to invest in the first place. So, no limit on you.

    Personally, the up front income tax relief tips me over the edge into the potential returns being compelling enough to be using the product versus not, so without it I would probably stick to more conventional options like smaller companies investment trusts and directly held shares (or institutional PE funds if I were wealthier).
    • marktristan
    • By marktristan 14th Aug 17, 11:18 AM
    • 13 Posts
    • 5 Thanks
    marktristan
    • #5
    • 14th Aug 17, 11:18 AM
    • #5
    • 14th Aug 17, 11:18 AM
    Remember you will usually be paying telephone dealing charges and will have to call for a quote.

    IMHO the only good reasons to acquire second hand VCT shares are
    1. if you spot a pricing mismatch, e.g. when NAV or dividend information has been announced but the market price is still has not reacted; I suspect this happens v rarely and timing is crucial
    2. if the discount to NAV widens significantly, and you believe this is an anomaly i.e. demand will return, thus making it a bargain. Some people did well buying VCT shares at 30-40% discount during market downturns.

    You still have to want to hold the VCT share for the long term as the market is not particularly liquid and buybacks are far from guaranteed.
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