Demand for access to VCTs, EISs and Seed EIS investments will soar from April 2014 as the number of of employees hit by the pensions lifetime or annual allowance soars, says The Venture Capital Platform.
The discretionary manager, which launched last month and which specialises in offering portfolios of venture capital investments through the workplace, says between 30 and 40 per cent of people earning £100,000 or more will find their tax-relieved pension saving capped from next April. It reports strong interest from employers for a product that offers 30 per cent tax relief on contributions and tax-free growth.
The provider invests across between eight and 12 funds, giving diversification across around 100 companies.
Charges are 1.75 per cent initial, plus 1.5 per cent plus VAT annual, on top of underlying manager charges, some of which are rebated.
The Venture Capital Platform managing director Jeremy Spencer was formerly wealth solutions manager for Origen Financial Services where he was responsible for tax efficient investments, alternative investments and structured products. Business development director Bruce Elliot-Smith was formerly business development director at Enrich and business development manager at Origen. Investment advisor Graham Frost was formerly chief investment officer at Bestinvest.
The firm says it is expecting to sign up its first corporate clients later this month.
Spencer says: “We have found some employers are particularly interested in the idea of offering a venture capital investment alternative for excess pension. If people are paying £50,000 in this year, but it’s £40,000 next year, this gives them an alternative tax-relieved option for that extra £10,000.
“About 10 per cent of the companies invested in will go bust but there will also be those that grow well. HMRC gives you tax relief on these investments because they are risky. But if you spread your investment across a lot of companies, you can diversify this risk considerably.”