HOW TO ENTER
From Dashboard, click on the '+' button>Savings and Investments>Investments:
(All fields with an asterisk need to be completed.)
Type & Account Name: Select Venture Capital Trusts from the drop down menu and enter the name of the account.
Balance: If the account has an existing balance (as at start-of-plan), then input this here. For new purchases leave this at £0.
Purchase Value: identifies the cost basis of the existing balance - from a tax perspective, of course, this is immaterial for VCTs, as no CGT is levied on gains.
Contribution Type: Choose amount, amount with inflation or percent of income from the drop down menu figure. The contribution will be made from surplus income.
If you are wanting to use existing savings/investment assets for the purpose of making contributions,leave the main Contribution field blank and instead use the Transfers option from Dashboard. This way, recurring contributions can be scheduled from a specified source account.
Please also keep in mind that contributions will only be made if funds remain available after expenses have been met.
Contribution Type Amount: Enter the contribution amount. You are able to choose a frequency by selecting the drop down box.
If you have selected Percent of Income this field defaults to Percent of Income
Timing: Go to the Timing section on the left of the screen (see screenshot, below). This section is used to set the time span over which contributions to the VCT are to be made - in this instance, between the Start event and the point at which John is age 75.
If the contribution is a one-off, you should use the same event for the contributions start and contributions end.
Note: If you don't have events on the timeline already that are positioned appropriately to be used as start or end events, new ones can be easily added. Go to the section called Events can be added on the fly in this article Events
Growth: Set the relevant growth and income rates. If using asset allocation, select this tab.
Click Done and the VCT will appear in Dashboard under Savings and Investments
An individual who is a taxpayer will receive a tax-rebate of up to 30% on their investment. If you invest £10,000 (as in the illustrated example) you could either receive a cheque for £3,000 or an adjustment to the tax you pay but, since this is a rebate, it is restricted to the amount of tax that has been paid/is due in that same year. In practice, one can invest up to £200,000 per annum and the software will provide tax credits of up to £60,000 which will be set against an individual's tax liability for that same year.
The screenshot, below, is taken from the Let's See screen>Year View>Taxes
Where you are making regular contributions you can view the cumulative benefit in the Cumulative Tax Summary section in Taxes
In reality, shares must be held for 5 years in order to keep the rebate. Note, however, that the software will not reclaim the rebate if the VCT is liquidated prematurely.
When shares within a VCT are liquidated, any gain is exempt from Capital Gains Tax.
3. Tax-free dividends
Any dividends paid by the VCT will not attract income tax, provided the original investment was made within the permitted maximum of £200,000 per year.
4. VCT Deferral Relief
VCT Deferral Relief is not available for investments in shares issued after 5th April 2004. For any investments that are eligible for deferral relief, this will not be reflected by the software.