This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.


Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

vct tax relief

Harry the dog
Posts: 1
Joined: Thu Nov 22, 2018 10:45 am

vct tax relief

Postby Harry the dog » Thu Nov 22, 2018 11:12 am

i am running down to retirement over the next couple of years. however i still have about £200,000 that is not in isas or sipps as i recieved an inheritance I was considering putting some money in to a vct. As i understand it i would get 30% tax relief on this and put some money in to a tax shelter for a few years.
my earnings are now about £25,000. I then pay £20,000 in to a pension and get £5000 added to it as tax relief meaning i put the maximum amount in to my pension. Then we come to income tax. my personal tax allowance is £13,000 meaning i pay income tax on £12,000. thats £2,400.
would i be correct in thinking that if i put £8,000 in to a vct i would get a £2,400 tax reduction and cancel out what i had paid. Or would the tax relief paid in to my sipp be took in to account and i would not be able to claim any more tax relief.
many thanks for any answers

Posts: 61
Joined: Thu Dec 22, 2016 10:04 pm

Re: vct tax relief

Postby D&C » Fri Nov 23, 2018 12:53 am

It is impossible to have a Personal Allowance of £13,000.

I think you are confusing your Personal Allowance with your tax code.

You need to explain what makes up the £13,000 for anyone to know what the tax benefit of paying into a VCT would be.

On the information provided the SIPP contribution doesn't impact your personal income tax position. The SIPP contribution isn't saving you any tax but does get the 25% top up from the pension company when you make the net payment.

I don't believe a VCT payment would affect that however you might want to check VCT doesn't affect the ability to make the SIPP contribution in the first place (unlikely I think).

Posts: 251
Joined: Tue Sep 26, 2017 6:28 pm

Re: vct tax relief

Postby AdamS93 » Fri Nov 23, 2018 9:52 am

VCTs are a risky investment - especially with brexit just around the corner.

In you position, I would definitely see an IFA. Being close to retirement, I dare say you want a fairly liquid investment - to retain the VCT income tax reducer, you have to hold the investment for at least 5 years.

This is an example of you having your tax blinkers on - your ultimate aim should be to realise the greatest gains/income, not reduce tax the most - if you earn £1,000 you pay no tax, but if you earn £100,000 you will pay a lot of tax, but you're still better off. This is obviously an extreme example.

There is a 'Marcus' account with Goldman Sachs which pays 1.5% interest and you can access it at any time. It may be worth looking into this.

Note: I am not a financial adviser but I suggest you go and see one!

Return to “Savings & Investments, Pensions & Retirement”