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Julian Gibbs

Keydata has introduced another innovative product which will have great appeal to income investors.

The Keydata income venture capital trust is designed to create a long-term, sustainable, tax-free income stream of 5 per cent a year from low-risk investments in renewable energy.

These investments generate long-term income flows from sales of power to major utilities companies such as PowerGen and Centrica.

In real terms, the 5 per cent income is equivalent to 8.33 per cent on the net investment, as a VCT in both this tax year and the next attracts 40 per cent relief both for higher-rate and basic-rate taxpayers. This is equivalent to around 10.7 per cent gross for basic-rate and 13.9 per cent for higher-rate taxpayers. Also, there is no capital gains tax.

Renewable energy is a specialist sector. Keydata has therefore attracted a highly experienced investment team which will invest in and manage windpower, biomass and waste to energy projects.

The team, now managing energy projects of over 200m, is led by Falck Renewables managing director William Heller. It is confident of enabling Keydata income VCT to be fully invested within 90 days of the offer closing, something unheard of in conventional offerings.

This sector is buoyant, having being ranked in the global top five for several years. Furthermore, the Government has set a target to produce over 15 per cent of the UK’s electricity supply requirements from renewable energy by 2015.

It is often said that high returns mean high risk but the tax provisions of VCTs mean this comparatively low-risk investment gives a vastly higher net return than any other conventional investment. This VCT is a must for income investors as part of their portfolio.

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