VCTs and EISs are not suitable for every investor but they can be a helpful tool in advisers’ tax and even pension planning, especially in a high-inflation environment, according to the guests on the FTAdviser podcast.

“Part of the reason you’ve seen significant popularity over the past few years in VCTs is, put simply, they’ve been looked at as a supplementary pension planning product,” said Jack Rose, head of retail sales at Triple Point Ventures.

“Pensions on a whole in the UK have continued to be restricted and the pool has narrowed in terms of how you can access them.”

The annual allowance taper and freezing of the lifetime allowance, for instance, has made it harder to put money into a pension, whereas VCTs with their tax breaks become an appealing option above the regular planning, he said.

“That’s one of the big driving points behind why you’ve seen the popularity in VCTs versus EIS, because VCTs offer that tax-free income so a yield of 5 or 6 per cent grossed up for an additional rate tax payer is 8 or 9 per cent when you factor that in, when you’re looking for income at the moment, given the hunt for yield to combat inflation, and that becomes really persuasive in the longer-term planning for people.”

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