By ADRIAN LOWCOCK 10/02/2012
Limited life VCTs are popular with investors who are looking to gain the immediate benefit of a 30% tax rebate, knowing that the manager will return their investment as soon as practically possible after the required holding period of five years.
The Puma series of VCTs from Shore Capital stand out in this respect. Their first funds in 2005 (the Puma VCT 1&2) were the first amongst their peers to return investors their money.
In this video interview, Adrian Lowcock meets Eliot Kaye, lead manager at Shore Capital. The interview looks at the benefits of investing in VCTs and the opportunities specifically offered by the Puma VCT 8.
Secured with assets
Puma makes its investments into businesses that have a high degree of security. Usually in the form of a freehold asset and backed with a chunk of the entrepreneurs own cash. A typical example might be a freehold pub, or a car park.
These investments are not going to experience any great growth, but the VCT will rank highly for any cash flows during the life of the investment and will have first charge over the assets. This gives the VCT manager the security that they can always service the dividend requirement and return the investors’ money promptly after five years.
This is a strategy which makes full use of the initial tax break and allows investors to redeploy their money shortly after the end of the five year holding period possibly into a new VCT with a fresh 30% tax break.
Making the capital work
By displaying a strong track record of returning cash and using a dedicated, quality investment team, we feel Puma 8 is a stronger contender for those seeking a limited life VCT, we award a 5 star rating.
As an added bonus, the Bestinvest discount has been increased from 2.5% to 3.5% until 29 February 2012.
Top fund idea
| Fund name |
Minimum investment |
Expected close date |
Our discount |
Star rating |
More information |
| Puma 8 VCT |
£5,000 |
5 April 2012 |
3.5% |
5 stars |
Download prospectus |
VCTs should be regarded as higher risk investments. They are only suitable for UK resident taxpayers who can tolerate higher risk and have a time horizon of greater than five years. Past performance is not an indication of future performance. Share values and income from them may go down as well as up and you may not get back the amount originally invested. Owing to the nature of their underlying assets, VCT's are highly illiquid.
Investors should be aware that they may have difficulty, or be unable to realise their shares at levels close to that that reflect the value of the underlying assets. Tax levels and reliefs may change and the availability of tax reliefs will depend on individual circumstances. You should only subscribe for new VCT shares on the basis of the relevant prospectus and must carefully consider the risk warnings contained in that prospectus. The information in this video is for educational and leisure purposes only and should not be taken as advice.
The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested. Prevailing tax rates and reliefs are dependent on your individual circumstances and are subject to change.