Starting early for tax year end investments

There is more time to capitalise on opportunities for early year end tax planning and VCTs are launching their fund-raising efforts now.

Venture Capital Trusts have started their fundraising for 2019/20.

There was a time when tax year end planning didn’t begin until well after the New Year festivities were over and a March Budget was nearing. This rhythm has now shifted. The last months of the tax year are still important, as they are the point at which you should have a reasonable idea of your total income in the year. But Philip Hammond’s move to an Autumn Budget from 2017 means that there is now more focus around this time of year, rather than post-Christmas. Although 2019 has become an aberrant year in many ways, including the postponement of Chancellor Sajid Javid’s planned Budget in November, business as usual on year end planning continues.

The seasonal switch is particularly noticeable in terms of Venture Capital Trust (VCT) offerings. VCTs allow you to invest in a basket of small, unquoted companies with the aim of helping them grow and develop. The high-risk nature of fledgling companies means VCTs come with significant incentives and have grown in popularity in recent years. In 2018/19 the highest amount ever was raised at the current level of tax relief.

There are three main reasons for the increased interest: