New: invest in Octopus Titan VCT without investing any new money
Archived article: please remember tax and investment rules and circumstances can change over time. This article reflects our views at the time of publication.
Most VCT investors will be familiar with Octopus Titan VCT.
At £425 million it is the largest and most popular VCT by some measure. It’s had some of the highest profile success stories of any VCT – from Zoopla to Graze.com and Secret Escapes. Its realisations include trade sales to the likes of Twitter, Microsoft, Google and Amazon – no other VCT can match this.
It’s also the first – and so far the only – VCT to allow you to invest in new shares using existing money you hold in an ISA. This is hugely significant. It means you can now invest in a VCT and get up to 30% tax relief without parting with any new money.
How does the Titan VCT ISA work?
The principle is simple:
- You don't need to invest new money – instead, you transfer funds from your existing ISA to the Titan VCT ISA and invest
- You're eligible for up to 30% VCT income tax relief – provided you hold the investment for at least five years
- Your investment is still in an ISA, so any growth and income are tax free
- You don't use this year's ISA allowance
The simplified example below illustrates what this could mean in practice.
Let’s suppose you transfer £10,000 from your existing ISA into the Titan VCT ISA, which invests in the Octopus Titan VCT. If this year you have a tax bill of at least £3,000 after other reliefs and allowances, that £3,000 tax bill could reduce to zero, by virtue of your VCT investment. Please note, tax rules can change and tax benefits depend on individual circumstances.
No other VCT provider currently offers a similar facility. If you are thinking of investing in a VCT this year, the Titan VCT ISA could be an attractive way of doing so.
What do I need to consider?
Firstly, you need to ensure you're happy to invest in a VCT. VCTs are generally higher risk and more illiquid than many mainstream investments you may hold in your ISA.
Before transferring you should ensure you won’t incur excessive exit fees.
Your ISA will be transferred as cash, so you’ll be out of the market while the transfer takes place and will be unaffected by any ups or downs in the market. The transfer timescale will depend on your existing ISA provider.
Unless the offer is fully subscribed before these dates, the following deadlines will apply:
- Early-bird saving of 2% on the initial charge: 14 November 2017 (5pm). The first allotment will be on 17 November 2017
- Deadline for allotment in the 2017/18 tax year: 4 April 2018 (12 noon)
- Final closing date: 4 September 2018 (12 noon)
How do I apply?
- Read the provider documents carefully, including the Brochure, Prospectus and the Terms and Conditions for ISA transfer as well as the Wealth Club terms of business
- Download and complete the Titan VCT ISA application
- Return your completed application to Freepost WEALTH CLUB LIMITED (no stamp needed)
Octopus Investments will honour the early bird discount based on the date of the application. Shares will be allotted at the next available allotment date after cleared funds have been received.
The VCT fundraise capacity will be ring-fenced based on the estimated transfer value you provide on the application form, so you have the best chance of receiving an allotment as the fundraise nears capacity, even if the transfer doesn’t complete by 14 November.
The shares will be held in a nominee service. No share certificates will be issued however Octopus Investments will issue a tax certificate to claim the 30% income tax relief as normal.
Wealth Club aims to highlight investments we believe have merit, but you should form your own view. You should decide based on the provider's documents and ensure you have read and fully understand them before investing. This article is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination. 12.10.2017