Victrex Share Discussion Threads

[timbo003] 17/3/2004 17:51

Looks like the budget has put paid to using VCTs to shelter Capital gains, see link to HM government's budget document (page 10-11) and the abstract below:




Venture Capital Trusts and Enterprise Investment Schemes

The 2003 Pre-Budget Report also announced proposals to target structural factors that have contributed to volatility in fundraising for Venture Capital Trusts (VCTs) and to improve the incentives to invest under the Enterprise Investment Scheme (EIS). The Government now intends to proceed with its proposals, including:

• doubling the annual investment limit for VCTs for both the relief for new
shares and shares in issue to £200,000;
• raising, also to £200,000, the annual limit on the size of investment eligible for income tax relief under the EIS;
• withdrawing capital gains tax deferral relief for investments in VCTs in
favour, in the long term, of an enhancement of equivalent value to the
incentives to invest through income tax relief for new subscriptions to VCT
shares; and
• in the short term, to provide a temporary additional stimulus to investment
in VCTs for a period of only two years, by increasing the effective rate of income tax relief from 20 per cent to 40 per cent

Following discussions with industry, and having explored alternative delivery options, the Government has decided to deliver this additional stimulus through a straightforward increase to 40 per cent in the rate of income tax relief paid to investors.

[a0002577] 21/1/2004 18:20

I am not sure that the 'unlimited' contribution to pensions is coming in - I beleive the paper just states unlimited up to the maximum of what you have earned in that year. You can have a look at this URL for more info or more simply just go to and follow your nose. Essentially the limits are these

Annual allowance


* Personal contributions will receive tax relief on the higher of £3,600 and 100% of UK earnings.

* There is no limit on the amount of contributions that employers can pay with full tax relief, in relation to current and former employees.



Close Bros are also going to raise more money for their AIM VCT which has been one of the better ones. Two issues 'D' shares in this financial year and 'E' shares in next one.

[currypasty] 14/1/2004 21:43

or me ...lol

To be honest i wouldnt mind the unlimited contributions to a pension bit. At the moment I feel I am 'victimised' as some of my incomes are not eligable for net relevant earnings.

[timbo003] 14/1/2004 21:17

If they do abolish CGT deferral for VCTs and they allow unlimited contributions into pensions next tax year (as seems likely), I will just ensure that I become an ordinary rate tax payer (by contributing circa £40K to my pension fund next year) and then I will only have to pay capital gains at the lower rate next year. I will never, never pay Gordon Brown 40% CGT, it's iniquitous!

Excessive tax is for other people, it's not me!

[timbo003] 14/1/2004 21:07

Looks like we have a few new VCT options coming up this tax tear:



I'm currently toying with the idea of going absolutely bananas on VCTs this year (£50K). After all, it may be the last opportunity to defer CGT in these mega tax efficient investments.

[timbo003] 03/1/2004 19:03

It's probably worth recording what was actually said/written by the Chancellor/Treasury in November about proposed changes to the VCT and EIS schemes.

Here's the link:



I've copied the relevant bits below

3.41 Following this consultation, the Government is also bringing forward proposals to target structural factors that contribute to volatility in fundraising for VCTs. In particular, the balance of respondents supported a move towards enhanced income tax relief under the scheme. The Government is in favour of a less cyclically sensitive set of incentives for investors. Subject to discussion with industry, it will consider withdrawing, from 6 April 2004, the current capital gains tax relief for investments in VCTs, and replacing it with an enhancement, of equivalent value, to the incentives to invest through income tax relief.

3.42 The Government is also mindful of the recent relative weakness of the VCT market and intends, subject to discussion with the industry, to provide a temporary stimulus to VCT fundraising for two years. The Government's favoured option is a temporary increase in the effective rate of income tax relief from 20 per cent to 40 per cent, with the value of the additional 20 per cent relief paid directly to the VCT rather than the investor. The expected cost of such a temporary measure would be in the region of £50 million per year, with further details to be provided in Budget 2004.

3.43 Subject to discussion with the industry, the Government intends to raise to £200,000 the annual investment limit for VCTs from 6 April 2004. It also plans to raise to £200,000 the threshold for income tax benefits under the EIS, which has not experienced weakness in fundraising to the same extent as VCTs.

[timbo003] 03/1/2004 18:31

A0002577

Many thanks for the link, it looks good!

Last year I negotiated with Allenbridge and we agreed that we would split their comission 50/50

The Britishtaxpayer site seems to go one better, i.e. circa 66% to the applicant, circa 33% to the adviser. I will buy through them this year.

My current realised capital gains are around £18K for this tax year, I will almost certainly take this higher (£30K minimum, possibly up to £60K, I haven't decided yet) as this looks like it may be the last year that we will be able to defer CGT through VCTs, the income tax break will be most welcome too.

[a0002577] 31/12/2003 09:22

Well done - the link is and then select Special Offers. I gather there is a new Close Brothers issue coming up so you can ask them when it is coming.

However don't forget that despite the much vaunted 40% roll over more often it is much less than that as you would be paying much less tax on unlisted assets and share sales that you have had for some time. The rollover could be as little as 10%. Check with your advisor as to what tax you are paying and then make a decision as to whether to take 40% income tax relief next year or 20% IT relief this year and whatever rollover relief you are entititled to. Good luck

Incidentally I rolled over this years gains into a Close Bros vct earlier

[timbo003] 30/12/2003 23:52

A0002577

you said

Assume you will buy through BritishTaxPayers as commission gets rebated by them

Can you illucidate further please, it sounds very interesting i.e. is purchase commission free? If so, could you provide a link please

Thanks in advance

PS: I have quite a serious CGT problem looming for this tax year, I may need to defer as much as £30K

[a0002577] 29/12/2003 09:02

timbo - are you sure its wise to even contemplate these - have you done well previously? I think that only the Close brothers VCTs are probably the only ones to look at - the 60% tax saving is certainly worth while but when you sell you still have to pay the gains (unless your sales are below the 7.5K limit) Why not consider buying Guinnes Flight in the market - probably better value than a new one. Assume you will buy through BritishTaxPayers as commission gets rebated by them

[timbo003] 28/12/2003 19:53

It's time to start thinking about which VCTs to invest in for the current tax year in order to shelter those hard won capital gains (this will probably be the last tax year where we can avoid CGT with VCTs)

I will probably invest around £10K (before April 2004), split roughly equally between the three listed below, all of them are quoted, so I have provided links to the ADVFN quotes pages and also links to the prospectus for each company.

Baronsmead 4 top up, epic BAV
BWD AIM VCT Small top up, epic BNS
Quester 5 top up, epic QUV

 
 
 
I have a feeling that the generalist funds (which include a large chunk of unquoted companies) may outperform the AIM funds for the next year or so.

Any thoughts?

[a0002577] 15/12/2003 09:03

TomRob - Are you sure that wind up isn't in 2004? Enterprise? As to EIS's - I do invest in these BUT not the ones advertised. Some groups of small investors take in outside 'angels' and you can participate. On the whole I have not done well out of these but they do pay dividends (when they make money) and they cannot usually be quoted except on AIM or OFEX. Can't you just take your CGT allowance and then re-invest the rest in either a Close Bros VCT or Unicorn? You probably have 12 months to do this.

[timbo003] 14/12/2003 20:24

Tom

If you are talking about 2005, I think your only option is EIS companies, I have no idea whether they pay divis though, are they even quoted?

[tomrob] 14/12/2003 20:06

Agreed my reading precisely however my interest in VCT's was (almost) entirely predicated on the cgt deferral I hold shares in 6 from the part realisation of an asset which has the other half scheduled to be cashed in in 2005. Any suggestions for an good income bearing investment which I can make without losing 40% of the cash I'm due to take in now that this option has been closed?

Regards,

tom

[timbo003] 13/12/2003 20:41

A0002577

Yes, I read that too

My reading of this is as follows: if you are a 40% tax payer and you invest £10K post tax income (next tax year), you will get a £2K rebate and HMG will then give £2K to the VCT (credited to you), thus effectively you will have invested £8K of your own (post tax income) and you will have bought VCT shares with a net asset value of £12K (minus comission)

[a0002577] 13/12/2003 19:56

The FT today has an article which indicates that you will still only get 20% tax relief and that the other 20% goes directly to the VCT and is in effect an extra slice in there for your money. i.e. you get 120 pence for your 95 pence (net of charges) subscription.

[a0002577] 13/12/2003 10:32

sinso - had a look at Unicorn : Yes they have done better than most BUT they have a lot still to invest and are trying to raise another £20 million. Nav is better than most so is definitely one to watch. Could look to buy in the after market if they do dip as very often you can buy them there more cheaply that new shares. Will put them on my watch list. Thanks for the info

[a0002577] 13/12/2003 10:19

Historically, very few VCTs have proved to be good investments - so with tax relief effectively reduced from 60% to 40% - and that dependent on actually earning substantial sums of money, there doesn't seem to be much point in investing in new ones. Culpability Brown has actually screwed up this form of investment - particularly by removing the tax credits when he first came to office.

sinso - will have a look at Unicorn

[sinso] 13/12/2003 09:20

For all those looking for a vct investment, Unicorn AIM VCT (The best performing vct since its begining run by Peter Webb will be issuing more shares soon).

p.s thanks for that Tim that is very interesting.

[currypasty] 13/12/2003 09:00

Thanks for that tim, it looks like with £37bn defecit, Gordon will be looking at every angle to screw few more beans out of us. I would tax borrowing...lol

[timbo003] 13/12/2003 06:12

Just found out a bit more on this at the Allenbridge site:



Looks like you will still be able to use EIS companies for Capital Gains deferral, I'm not so keen on those though.

[timbo003] 13/12/2003 06:00

I see that the tax breaks for VCTs are about to change from next April

Bit of curate's egg this one.

Brilliant if you are a 40% tax payer without a CGT liability, not so good if you are a 40% tax payer with a big CGT liability

Better make sure we crystallise all of those capital gains and reinvest in VCTs before April then.

After next April, 40% tax payers will effectively be able to get themselves out of the 40% income tax bracket by buying enough VCT to get them under the 40% threshold (I shall be doing this needless to say)




Investment

City workers celebrating the return of the bonus were handed an ideal low-tax haven for their money. In his efforts to increase funding for fledgeling companies, Mr Brown handed a fillip to Britain's wealthiest individuals by increasing the tax breaks available to investors in venture capital trusts (VCTs).

The rate of income tax relief available under the schemes - which enable people to invest indirectly in private companies while enjoying tax breaks, including a 40 per cent capital gains tax deferral - is to be raised, for a two-year period, from 20 per cent to 40 per cent. The limit for the income tax relief has also been raised from £100,000 to £200,000 in any one year.

Enterprise investment schemes, which enable investors to put money directly into small companies while enjoying tax breaks, will have the same new limit.

The changes to VCTs could prompt a renewed stampede into the schemes when the new measures are introduced in April 2004. But there is a catch. The Chancellor is also proposing to withdraw, from next April, the ability to defer liability for capital gains. The outcome, say experts, is that the schemes will not be so attractive for investors with less to put aside.

[a0002577] 28/10/2003 18:56

Anyone seen the Downing Healthcare proposals for a change in style ? Is so please pass comments on to this board - seems to me that there might well be a better option than the one they are proposing