VCT's - cheapest place to buy / hold

Marine_life

Having used all our ISA and pension allowances for this year I am looking at Venture Capital Trusts as a way to reducing our tax bill.

Where is the cheapest place to buy in terms of both the initial charge and annual holding costs?

dunstonh

Are you letting the tax tail wag the dog?

VCTs are a niche option suitable for probably less than 2% of the population. Do you feel you know enough about them to say that you fit that sort of minority?

HappyHarry

Marine_life wrote: »

Having used all our ISA and pension allowances for this year I am looking at Venture Capital Trusts as a way to reducing our tax bill.

Where is the cheapest place to buy in terms of both the initial charge and annual holding costs?

You really, really don't want to be buying the cheapest VCT in an effort to reduce your tax bill.

If you're looking for a VCT, which is a high risk investment, then quality is everything, not price.

masonic

HappyHarry wrote: »

If you're looking for a VCT, which is a high risk investment, then quality is everything, not price.

I presume the question is about where to hold rather than which to choose.

In some cases the cheapest way is not to go through an intermediary. In others, where the fees include provision for trail commission whether or not it is paid, then one fairly cheap option is interactive investor, although be warned the customer service is somewhat less than excellent. But do make sure the rebated trail commission covers their £30 charge to process your application.

HappyHarry

masonic wrote: »

I presume the question is about where to hold rather than which to choose.

In some cases the cheapest way is not to go through an intermediary. In others, where the fees include provision for trail commission whether or not it is paid, then one fairly cheap option is interactive investor, although be warned the customer service is somewhat less than excellent. But do make sure the rebated trail commission covers their £30 charge to process your application.

Fair point, I may have misunderstood the question.

My apologies to the OP.

It'll be worth comparing whatever you find, to the cost of purchasing direct from the VCT provider.

londoninvestor

masonic wrote: »

I presume the question is about where to hold rather than which to choose.

In some cases the cheapest way is not to go through an intermediary. In others, where the fees include provision for trail commission whether or not it is paid, then one fairly cheap option is interactive investor, although be warned the customer service is somewhat less than excellent. But do make sure the rebated trail commission covers their £30 charge to process your application.

I'd take a look at HL, Wealthclub and BestInvest too, and see how they all compare to direct application.

Note that it's really about "where to buy" rather than "where to hold". You won't get VCT shares in a nominee account - you'll get physical share certificates. The tax rules say that you need to hold the shares directly yourself, rather than through a nominee, to get the 30% tax rebate on investment.

(Or at least that used to be the case - change was supposedly coming, but when I last bought a VCT in Jan 2018, it was still certificate-based.)

In general take a look at the Lemon Fool board too for VCTs - there is more VCT-specific discussion there than here. Although I don't think it's as much as it was in the Motley Fool days.

masonic

londoninvestor wrote: »

Note that it's really about "where to buy" rather than "where to hold". You won't get VCT shares in a nominee account - you'll get physical share certificates. The tax rules say that you need to hold the shares directly yourself, rather than through a nominee, to get the 30% tax rebate on investment.

(Or at least that used to be the case - change was supposedly coming, but when I last bought a VCT in Jan 2018, it was still certificate-based.)

You normally apply direct to the provider, by filling out their application form and sending it to them. However, if you want to benefit from rebated trail commission, then you would either fill out the details of your chosen intermediary, or send the completed application to them so that they can fill out their own details before forwarding to the VCT issuer on your behalf.

Typically, as you say, a share certificate would then be issued to you, whether or not you selected a nominee, and you would need to send this to the nominee to have the investment transferred electronically to your account. I currently hold a few different VCTs electronically.

Some providers can now send VCT shares directly to an electronic trading account, although I've not had any experience of this.

Marine_life

dunstonh wrote: »

Are you letting the tax tail wag the dog?

VCTs are a niche option suitable for probably less than 2% of the population. Do you feel you know enough about them to say that you fit that sort of minority?

Its a fair challenge. To put it in context the amount I'm looking to invest is only around 1% of our investible assets.

The reason for looking to VCTs is to offset a higher rate tax bill.

I only have the minimum pensions reliefs available this year (£10,000) due to income level and have no brought forward allowance (was living overseas). Have diverted as much income as possible to spouse to make use of her basic rate bands.

VCT seems to be the only other route available. Unless you know different ;-)

Marine_life

masonic wrote: »

I presume the question is about where to hold rather than which to choose.

That's correct - looking to minimise fees.

masonic

Marine_life wrote: »

That's correct - looking to minimise fees.

Where do you hold your conventional investments? It may be cheapest to hold your VCTs in the same place if you are paying a flat platform fee.

Marine_life

masonic wrote: »

Where do you hold your conventional investments? It may be cheapest to hold your VCTs in the same place if you are paying a flat platform fee.

In the UK we use the share centre for our regular investments and are just about to open SIPPs with AJ Bell. Neither offer VCTs. (or not that I could find!)