Are green trusts too hot to handle?

13 january 2013

 

Investors are piling into green venture capital trusts to benefit from two sets of tax breaks but advisers have warned that the schemes could become a “charlatan’s delight”.

Venture capital trusts (VCTs) are investment funds that offer income tax relief of 30% on contributions of up to £200,000 each tax year, provided investors hold the shares for at least five years.

This tax year, a new breed of green VCT is being launched to capitalise on another tax break — the government’s feed-in tariffs. Introduced in April, these pay homeowners and businesses for every kilowatt hour (kWh) of energy they produce from approved renewable sources, including wind turbines, solar panels and anaerobic digestion units.

The payments are tax free and guaranteed for 25 years. The government’s aim is to provide investors with a return of between 5% and 8% a year.