John Glencross, CEO, Calculus Capital is quoted in a piece run by Investment Week.
How do VCTs and EIS compare for retirement planning?
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.
John Glencross, CEO, Calculus Capital:
Good pension ‘top-up’
With the annual pension contribution limit now at £40,000 – when it was £255,000 only a few years ago – and the lifetime allowance at £1m, there is a clear need among higher earners for supplementary tax-efficient investments through which they can ‘top-up’ their pensions. EIS and VCTs each have attractive characteristics in this respect that make them good complements. The bulk of VCTs’ investment returns are typically paid as tax-free dividends, which is very useful from a retirement income perspective, particularly because income from pensions is taxed. EIS are 100% free of IHT after two years, which can have an important role in estate planning alongside pensions. EIS and VCTs can provide portfolio diversification and lower correlation to public markets through exposure to potentially higher growth smaller companies.
For the full article please see here.