John Glencross: What lies behind the rise in tax-efficient investment levels?

EIS and VCTs increasingly on investors’ radar

clock • 6 min read

John Glencross looks at the reasons - most notably the scaling back of pension tax relief over recent years - why EIS and VCTs are appearing on the radar of an increasing number of investors

Pensions are not what they used to be - certainly not for high-earners and those who have accrued large funds anyway. Over the past five or six years, successive governments have cut back the tax relief paid out - some £50bn a year currently - as they have tried to reduce the budget deficit. This began in the 2011/12 tax year, when the annual allowance was cut from £255,000 to £50,000 - an amount that has since been trimmed to £40,000. More recently a complicated tapering system has been imposed on those earning more than £150,000, which means those at the upper end of the system's scale...

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