Venture Capital Trusts, Film Partnerships and Other Investments

These types of investments are often referred to as alternative investments. Generally speaking they offer attractive tax benefits, but consequently carry higher levels of risk. They are aimed at more wealthy individuals.

A Venture Capital Trust is a collective investment vehicle quoted on the London Stock Exchange. They invest in small unquoted companies. Income tax relief at up to 30% is available (if shares are held for more than five years) on up to £200,000 of investment in each tax year. Tax free dividends and exemption from capital gains tax is a feature.

A Film Partnership Scheme has the potential to offer tax deferral opportunities. The amount subscribed counts as a tax loss. A gradual repayment of the tax due to HM Revenue & Customs is made from income generated over a 15 year period. The tax saving made must generate a positive return of around 4% per annum for the arrangement to be beneficial.

Enterprise Investment Schemes offer direct investment in small unquoted companies. Income tax relief is available at 20% (up to £500,000 invested per annum) an unlimited capital gains tax referral. They are exempt from capital gain tax and free from inheritance tax (after two years). Specialist managers offer funds and portfolio services investing in qualifying companies to spread investment risk.

Forestry investment offers capital gains tax exemption and capital gains tax rollover relief. Investments are free from inheritance tax after two years and income generated is exempt from income tax. Investments are by their nature illiquid. There are a limited number of Forestry investments funds, offering access to a portfolio of plantations at more manageable investment sizes.

Enterprise Zone Property Trusts offer generous tax advantages for those willing to invest in commercial property in commercials zones. Income tax relief is available on the initial investment, but your money is often tied up for 10 to 15 years. Product availability is now scarce.

There are many tax advantaged alternative investment schemes. Substantial tax advantages often mean higher risk and illiquid investments. If you are a higher net worth individual and would like to explore these opportunities further, please contact us.