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Forward Focus

08.04.21

In recent years, changes to tax rules keep placing high earners in the firing line. Alex Davies, founder and Chief Executive, Wealth Club Limited explains more

Present times are bringing more than their fair share of challenges and nowhere more so than in relation to rising tax burdens on wealthier investors. We’ve seen the reduction in mortgage interest tax relief on buy-to-let properties, together with the hike in stamp duty on buy-to-let properties. Dividends are increasingly being taxed. Meanwhile, pension allowances and tax relief are being constrained, cutting off one of the traditional tax-efficient ways to invest.

Now, after the rise in Government spending due to the Covid-19 pandemic, further tax rises appear inevitable. What could high net worth and sophisticated investors do? Of course, there’s the option to sit and watch the raid on property, dividends and pensions. A more sensible route to take perhaps, is to explore less mainstream investment opportunities.

Fortunately, alternatives do exist. For example, Venture Capital Trusts and the Enterprise Investment Scheme are government-backed schemes to encourage investment in young and dynamic British enterprise. The long-term reward for doing so is the potential to back a winner. The short-term reward is the significant tax reliefs the government offers in exchange for supporting riskier younger businesses.

These are all high risk investments for experienced investors and you could lose your capital. The trade-off is that if you are a high net worth or sophisticated investor you could enjoy significant benefits.

What led you to set up Wealth Club?

The idea behind Wealth Club was born of personal experience and frustration.

I was a board director at Hargreaves Lansdown, leading the team that built the UK’s largest direct-to-consumer SIPP with more than 150,000 clients and over £12 billion under management.

Eight years ago, after leaving Hargreaves Lansdown and selling some of my shares, I looked around for tax-efficient ways to invest, in addition to my ISA and pension allowances. I started making significant investments in VCTs and EIS.

I soon realised this area of the market was not well served. The most interesting opportunities seemed to come through word of mouth rather than established and credible financial services organisations. It was hard to find impartial and trustworthy research and information. Some were good investments, but it was difficult to separate the wheat from the chaff, not to mention apply and keep track of them.

What has happened since?

In 2016 we set up Wealth Club to open the lid on tax-efficient investments, make them more transparent, simpler to apply for and easier to monitor.

In five years it has become the UK’s largest broker specialising in tax-efficient and alternative investments. To date, 6,054 experienced investors have invested £504 million through us.

The press regularly comes to us for commentary on tax-efficient investments – we’ve been quoted in the FT, Times, Telegraph, City AM, MoneyWeek, This Is Money and Investors’ Chronicle, to name a few.

What do investors get?

Regularly updated information on tax-efficient investments – VCTs, EIS and SEIS, IHT portfolios and forestry – plus access to single company and co-investment opportunities that are rarely available elsewhere.

We were the first to offer online applications for Venture Capital Trusts, and now investors can apply online the vast majority of investments we offer. This has been much appreciated by investors during the pandemic, when some paper-based operations have had to curtail their services.

We also provide market-leading savings  – when you invest through us you normally pay less than you would if you invested directly with the provider, through an adviser, or another broker.

How do investors join Wealth Club?

If you are a high net worth or sophisticated investor, head to www.wealthclub.co.uk/abode2/join and register with us to start hearing about the investments on offer.

 

Please note that Wealth Club’s service is only for persons in the UK who will be required to self-certify as Sophisticated Investors or High Net Worth Individuals before applying to invest. The investments we offer are not for everyone. They are generally higher risk, require a longer investment term and you could lose the capital you invest. If you are unsure whether an investment is right for you, seek professional financial advice.

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