How do VCTs and EIS compare for retirement planning?

Differing benefits for pensioners

clock • 8 min read

Amid concern Chancellor George Osborne plans to announce further changes to the pensions tax relief system in the Budget next month, managers reveal how holding VCTs and EIS within retirement portfolios could prove beneficial.

Philip Cook, private client partner, Thomas Miller Investment Complement pensions VCTs provide tax-free dividends, which makes them attractive for higher-rate tax payers seeking income in retirement who are willing to lock their money away. Capital at risk is reduced by an income tax deduction of 30% on the amount invested, assuming shares are retained for five years. Therefore, this can make VCTs a good complement to pension income in retirement. Meanwhile, dividends paid to EIS investors are taxable, so returns are generally distributed as capital that is tax free. This profile mak...

To continue reading this article...

Join Professional Adviser

  • Unlimited access to real-time news, industry insights and market intelligence.
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters.
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection.
  • Members-only access to the editor’s weekly Friday commentary
  • 
 Be the first to hear about our events and awards programmes.

Join

 

Already a Professional Adviser member?

Login

More on Investment

PFS opens adviser ESG short course tied into Consumer Duty work

PFS opens adviser ESG short course tied into Consumer Duty work

Society says clients are increasingly interested in sustainable investing

Hope William-Smith
clock 25 September 2023 • 2 min read
Clever Marlborough MPS now available to all UK advisers

Clever Marlborough MPS now available to all UK advisers

Uses quant-tech to analyse increasingly rapid market velocity

Jenna Brown
clock 21 September 2023 • 1 min read
Scotland Investment Roadshow: 2023: One week to go!

Scotland Investment Roadshow: 2023: One week to go!

Professional Adviser is back by popular demand this September

Professional Adviser
clock 21 September 2023 • 1 min read