How do VCTs and EIS compare for retirement planning?

Differing benefits for pensioners

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.

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 Investment Week

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now


Already an Investment Week


More on VCTs/EIS

At the time of writing, the fund has raised in excess of £50m and made 44 investments of which 14 are follow-on investments.

Foresight reopens FW Technology EIS fund

Launches new prospectus

clock 14 June 2022 • 1 min read
Manager of Columbia Threadneedle UK Social Bond Simon Bond, who hands over fund management responsibilities at the end of the month.

Square Mile downgrades Columbia Threadneedle UK Social Bond on Simon Bond's departure

Somerset GEM loses rating

Melanie Boulton
clock 08 June 2022 • 2 min read
Global Equity Income became the best-selling IA sector in April

ISA season boost reverses fund outflows

£553m inflows over April

Melanie Boulton
clock 06 June 2022 • 1 min read