INVESTMENTS
MAKING YOUR TAX EFFICIENT INVESTMENT ADVICE EVERGREEN
James Ramsay Managing Director Kuber
Doubling Day – the day in March from which
EIS and VCT providers used to receive as much in applications as they had received the whole of the rest of the year . An industry that received 50 % of its business in the last month presented issues for providers as well as advisers and investors . Thankfully the industry has changed , and so should your advice model around these products . Venture Capital Schemes ( EIS , SEIS and VCTs ) have come on leaps and bounds in the last five years . They have finally found the right balance between compelling underlying investments , attractive tax reliefs and material benefits to UK plc . The Patient Capital Review (“ PCR ”), and the industry ’ s response to it , are largely to thank for these changes . The Risk-to-Capital Condition that followed it means that only businesses that are focussed on growth now qualify for the reliefs . These are the same businesses that will generate the most jobs and tax revenue for the UK . They are also the same businesses that will give investors the best chance of making multiple times their money back – and with a CGT exemption . Of course , the risk / return profile means while there are greater potential returns there will also be greater potential for failures . Conveniently though , these investments offer at least 30 % of the investment back in the form of income tax relief ( even if the investment goes bust ), and on successes the gains will be CGT free . These tax reliefs make EIS , SEIS and VCTs very well suited to the current environment where those companies doing well are doing extremely well and those that are not will likely fail more quickly . What these are not anymore is convenient tax planning tools . Before the PCR some of these investments were
promoted as such , and this is what particularly lead to such a tax year end frenzy . Advisers looking to advise in this space can no longer leave this business to the last minute ; unless they use external specialist support like Kuber ( we offer a referral service to SimplyBiz firms whereby the leg work and research has already been done ). Rather they should be looking to consider these investments throughout the year as client need demands . VCT business is limited to which Trusts are open and when . Generally speaking , the “ season ” starts in November and runs through to 5th April . The most popular VCTs tend to be the first to fill up , and as such , considering which of your clients might be suitable should be done much earlier in the tax year to avoid having to “ settle ” later in the tax year . Most Evergreen EIS / SEIS will target an allotment within 12 months – meaning the carry back for shares allotted next year will allow clients to offset current tax year liabilities . The evergreen nature of the fundraising means they can be invested into all year around and if a client does not get invested before the end of this tax year there will still be plenty of compelling offers into 2021 / 22 . For clients who only have 2019 / 20 income tax to offset , some EIS and SEIS offers will allow allotment of shares in the current tax year - allowing for carry back of income tax relief back to the 2019 / 20 tax year - but they are cutting it very fine . Either way Kuber can help . As a referral partner of SimplyBiz , we can provide you with an “ oven-ready ” tax efficient function to support your business and your clients , one that covers the entire tax efficient research , investment , monitoring and reporting process . P
To learn more about how Kuber can support your advice process , visit the SimplyRefer page of the Member or Client website today or contact Kuber on 020 7952 6685 or via email at info @ kuberventures . com
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