Wealthy Britons will not abandon venture capital trusts in favour of boosting their pension contributions, despite the pension saving regime becoming more attractive for higher earners, a specialist has said.

Jess Franks, head of investment products for Octopus Investments, said although chancellor Jeremy Hunt abolished the controversial lifetime allowance cap in the 2023 Budget, this did not make the tax incentives of VCTs any less attractive for investors wanting to boost their assets ahead of retirement.

Franks said: “We don’t expect to see the majority of VCT investors increasing pension savings at the expense of VCTs, as they are very different propositions, with different timelines, objectives and outcomes.”

As reported at the time, Hunt got rid of the increasingly punitive lifetime allowance cap in the Budget earlier this year, potentially boosting pension investment over alternative tax-incentivised investments.

In previous years, FTAdviser has written on advisers using VCTs and similar investment structures to help higher net-worth clients overcome a punitive LTA cap.

In 2015, cuts to the LTA saw Albion VCT poll advisers, 32 per cent of whom said their clients would be more interested in VCTs as a result of the cut to the allowance.

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