View more on these topics

Downing VCT explores IHT options

Downing Corporate Finance has established the Pennine Aim VCT 6, a venture capital trust that has an inheritance tax option after three years.

The VCT, which is managed by Rathbones, will initially invest the proceeds of this share offer in fixed interest and cash deposits. Over the next three years the money will be switched to qualifying unquoted companies, mainly those listed on Aim.

However, up to 30 per cent will remain in fixed interest and cash deposits and a small percentage may go into non-qualifying Aim companies that Rathbones believes are undervalued.

Rathbones prefers to invest in unquoted companies already listed on Aim rather than new flotations because it is more likely to have a detailed knowledge of the stocks, so any investment should carry less risks than a new flotation to Aim.

Characteristics that Rathbones looks for when selecting unquoted companies include good growth opportunities, experienced management teams and healthy balance sheets.

After three years the board intends to provide investors with two options a VCT option where investors will receive a tax-free cash return of 30p for every 1 invested and regular tax-free dividends, and the inheritance tax relief option where investors receive a direct holding in the underlying investments and benefit from 40 per cent IHT relief on this after another two years.

Ordinarily, VCT shares are listed so they are subject to IHT if the investor dies while holding them. But where the IHT option is chosen, a special class of i shares will be created, allowing shares in the unquoted companies to be allocated directly to investors. Investors can then decide to manage the portfolio themselves or allow Rathbones to manage them within its IHT service.

This VCT is similar to the Close IHT Aim VCT but they are structured differently. Investors in the Close VCT must choose between VCT and IHT options at the outset, with the IHT option requiring a higher minimum investment of 50,000 compared with the 5,000 minimum for the VCT option. The Pennine Aim VCT has the same minimum investment for all investors at the outset but restricts eligibility for the IHT option after three years to investors who hold at least 30,000 shares.

Recommended

Keydata makes income bond third issue

Keydata has made the third issue of its secure income bond offering 7.5 per cent income a year and full capital return at the end of the five year term.The bond invests in a mixture of cash and traded insurance contracts. The new issue opens on November 7 and closes December 23, 2005.

6.5 Million workers have no pension

A third of full-time workers are still not contributing to a pension, despite increased publicity on the woeful state of pension provision. Research conducted by B&CE Benefit Schemes, the not-for-profit stakeholder provider to the construction industry, shows that 37 per cent of full-time workers – 6.5 million people – are not contributing to a pension […]

Framlington’s second Aim VCT seeking 35m

Framlington is looking to raise 35m with the launch of its second Aim VCT. Brian Watson, who runs the firm’s first Aim VCT, which raised 24.6m in 2004/05 after being launched last December, will be lead manager. Watson will be supported by the UK team, which inclu- des Roger Whiteoak, Nigel Thomas, Richard Peirson and […]

Law Soc blasts Hips

Home Information Packs have come under fire from the Law Society following the move by the Government to publish draft regulations this week. The Society is concerned the Government still has not set up appropriate certification arrangements to regulate and control the production of the reports and the people who produce them.

India budget and the liquidity supercycle

Kunal Desai, manager of the Neptune India Fund, comments on how India’s 2017 budget will impact the Indian economy and equity market. Read article here: Important Information – for Investment Professionals only. Not for Retail Clients.Investment risksThe Neptune India Fund may have a high volatility rating and past performance is not a guide to future […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment