Why I’ve made these three investments this week
Archived article: please remember tax and investment rules and circumstances can change over time. This article reflects our views at the time of publication.
I’m usually a last-minute person, but not this year.
With tax-efficient investments, supply could be limited but demand high, thanks to rule changes and restrictions on pension contributions.
So if an investment catches my eye, I know I should do it now, in case there are no decent opportunities left come April.
1. Business Premises Renovation Allowance (BPRA)
First off I’ve invested in a scheme for experienced investors which uses BPRA. It could provide additional-rate taxpayers with up to 70% tax relief. The allowance can be used to bring new life into unused commercial buildings in certain areas, e.g. by turning an empty office into a hotel.
BPRA ends in April for good, so this is likely to be one of the last opportunities. The scheme is run by an experienced manager whose team is investing a lot of its own money. Tax benefits can change and depend on circumstances.
2. Titan Storage EIS
I’ve also invested in an EIS. I like the benefit of up to 30% income tax relief.
I can also defer gains made up to three years ago. So I can claim back CGT bills I’ve already paid and get that money working for me instead.
When I sell my EIS I will pay the CGT at whatever rate applies at the time. If rates stay the same, I will pay it at 20% rather than the 28% which applied on the gain. Alternatively I can invest in another EIS and keep deferring the gain, potentially indefinitely. As above, tax benefits depend on circumstances and tax rules can change.
The EIS I've chosen is Titan Storage.
I like storage businesses because they tend to have significant asset backing and predictable revenues and exit plans, although there are no guarantees. Demand seems to be growing and historically the sector has been largely unaffected by recessions. The manager is Ducalian, which has set up a number of successful Titan Storage sites already.
3. Unicorn AIM VCT
Finally, like many of our clients, I have reserved a tranche in the Unicorn AIM VCT, expected to open on Friday 13 January.
This is the largest and most popular AIM VCT. It has an exemplary track record both in terms of dividends paid and capital growth, although past performance is not a guide to the future.
But in my view the main reason for investing is the manager, Chris Hutchinson. He’s one of the highest regarded AIM investors, with years of experience. He knows the market inside out. And his cautious and high conviction approach has served investors well to date.
One last thought
If you’ve kept an eye on our recent emails, you’ll recognise these three investments. This is no coincidence. We review most of the opportunities available, but we only highlight to our clients those we would be happy to invest in ourselves and in many cases actually do.
I have personally decided to invest in these three offers. You should note they are all high risk, long-term commitments and you could lose your capital. This email, like our service is not advice nor a personal recommendation – you should make your own decisions. If you are not sure, please seek advice.