Hargreaves Lansdown has unveiled a new online venture capital trust (VCT) investment service in response to the tax increases announced in last month’s Budget. Initially, the service will offer five VCTs, including two AIM VCTs from Octopus and its Apollo VCT, Blackfinch Spring VCT and Calculus VCT.
This development follows a series of tax alterations in the Budget, such as an increase in capital gains tax from 20 per cent to 24 per cent. However, profits from VCTs are not subject to capital gains tax when sold, and investors can claim 30 per cent income tax relief on VCT investments, as reported by City AM.
Last year, over 26,000 VCT investors claimed income tax relief on £985m of investment. Meanwhile, concerns that AIM stocks would lose their exemption to inheritance tax relief have eased, as only a fifty per cent rate was applied in the fiscal event.
The FTSE AIM 100 index has risen nearly three per cent since the day before the Budget, making AIM VCTs, a common area of focus for these vehicles, keen to invest. Clients will be charged a £50 dealing fee to apply for the service and an additional £50 fee to trade VCTs, with no commissions or platform fees from Hargreaves Lansdown.
Wealth Club, a popular VCT investment service, was launched by former Hargreaves Lansdown staff in 2018, including ex-Hargreaves director and current Wealth Club CEO Alex Davies.
“After the commitment made by the government to extended VCTs to 2035, and given the tax changes announced in the Budget, VCTs are a great way for people to invest their money in a tax-efficient way, over the longer term, as part of a diverse investment portfolio,” Emma Wall, head of platform investments at Hargreaves Lansdown, commented. “Using our market leading position and scale, our VCT service has the potential to help the VCT market grow in the future, delivering favourable returns for investors, and support more businesses at the start of their growth journey.”
“It’s great to see Hargreaves Lansdown coming back to the world of VCTs, offering suitable retail investors the opportunity to access exciting, early-stage private companies,” Jess Franks, head of investment products at Octopus Investments, added.