Does VCT tax relief affect tax band allowances?

otherwayup

When you enter pension single contributions into your self assessment ("Payments into a retirement annuity contract etc."), it affects your "Total income on which tax is due" amount.

This could have a knock on effect of reducing tax on savings income by moving that from Higher to Basic bands (depending on the individual's amounts).

Do investments in VCTs work in a similar way and affect any allowances/income values?

As the relief is fixed 30%, I assume not and they calculate all your income/interest tax first and then, if you have paid a sufficient 40% tax amount, give you the 30% relief back?

Trying to work out if my savings income will be Basic or Higher allowance/rate, etc.

Thanks

Dazed_and_C0nfused

No, it's a tax reducer.

Your liability is worked out ignoring the VCT and then the VCT relief is deducted from that.  But I don't think it can become negative.

If you tried the RAR box why not just try the VCT box yourself 🤔

otherwayup

Thank you for answering.  Honestly appreciated. 👍
I didn't 'try' anything.  I looked at last year's (non VCT invested) return. 😔
I can't see a way to 'try' out, for this years return.  Is there a way on HMRC website?

Dazed_and_C0nfused

otherwayup said:

Thank you for answering.  Honestly appreciated. 👍
I didn't 'try' anything.  I looked at last year's (non VCT invested) return. 😔

You can amend that to see how it works.  Just remember to discard it and not submit it to HMRC 😳