VCT tax relief calculation - drawing down from SIPP to buy VCTs to avoid LTA charge at age 75

Dead_keen

VCT relief doesn’t change your tax band and so you would pay CGT at the 20% / 28% rates. It’s in s23 and s26 ITA if you want to look at the details (and s1I TCGA for the CGT rules). 

jamesd

Given the amount you had (and have even more now) you're in a situation where I would normally be suggesting a few years of higher rate withdrawing so I think your decision to do that is a good one.

VCT relief doesn't affect the tax band. First HMRC calculates your full tax liability and then the VCT relief is used to reduce that.

For your unwrapped investments you could go with selling no more than is within your CGT allowance for gains while you're doing the higher rate drawing. Trying to use the full CGT allowance every year but no more is also a pretty standard suggestion to prevent big gains from accruing.