Category Archives: investment
The tax year just ended is the third and last in which I had substantial PAYE earnings to worry about. So I’ve used the same three tax-saving measures as in the last two years, including my biggest ever venture capital investment. I seem to be one day late for my annual review, so here goes.
I also need to consider better measures of performance. As portfolios mature, so naïve measures of current value vs money paid in become increasingly meaningless. But that’s beyond the scope of anything I want to publish here. So how am I faring?
The ISA is the most conservatively invested, and is cumulatively showing +26%, against 24% last year. Net of new money invested, that’s a modest 5% actual rise over the year (tax-free), so I guess it’s treading water. Not complaining too loudly, since my priority there has been to preserve value and save tax.
The SIPP is up either 126% or 36%, depending on whether or not we include the tax breaks in the calculation. That’s a moderate advance on last year (112%/27%), and better when you factor in the fact that most of the new money was put in at the end of the year and so is showing no gains beyond the tax break. It’s now reached a level where, if I have a house by then, I can expect to be quite a lot richer as a pensioner than I have in my working life. Even factoring in the demographically-inevitable loss of pensioner tax breaks and perks! But it’s still worth building the fund, because the tax-free lump sum is my most likely route to paying for a house (or paying off a mortgage), and if I’m still paying rent it wipes out the pension and more!
Finally, the Venture Capital portfolio. On paper it’s a capital gain of just over 27%, though due to liquidity issues I wouldn’t expect to be able to realise the whole of that paper gain. More important is the rising dividend stream: over £1100, plus ex-divs worth another £300+. That’s more than double last year’s income, and I expect another significant improvement this year as more investments mature (though the chances of all the funds contributing are remote). Most encouragingly, the government has improved VCT rules in this year’s budget (along with even bigger EIS improvements, that I suspect will lead to EIS schemes being offered to retail investors alongside VCT).
As before, the element of ‘green’ in my portfolio is showing mixed results. The ‘dark green’s continue poor, though losses have been much smaller than before. The ‘light green’ portion continues to show excellent returns. In terms of ‘dark green’, the government may already have pulled the rug out from under my latest substantial investment, by slashing the FITs scheme for investors and turning it into (almost) just another homeowner perk (hey, if I were rich enough to own a home, I’d've spent that money on my own solar panels – I only invested it in a fund because I’m too poor for that). I’m no great fan of FITs (charging a more realistic and rising price for non-renewable energy would be a much better incentive), but I’m not happy about the government moving the goalposts retrospectively with regard to already-committed investments.
What of this tax year? Well, I’m back to being my own boss, and I’ve no idea whether I’ll get any significant income. If I do, I can once again take advantage of small-company tax management, so I should have much less need of tax-saving investments regardless. Unless I end up in another PAYE job.
A couple of weeks ago, I received two essentially-identical letters in the post. They claim to be from Capita Registrars. There’s a Capita logo, and a footer referencing contact details for Capita Registrars. So far so good, but does that mean they’re from Capita? A competent fraudster might very well impersonate them to get my identity details and a foot in the door of my finances (whatever they may be).
The letters run:
IMPORTANT: Protecting your shareholding against fraud
We have recently received an instruction to change details on your holding.
The following details have been changed:
- The way you receive your payments
If you did not ask for any changes, please contact us immediately by telephoning 020 8639 3312 or +44 8639 3312 if you are outside the United Kingdom.
This letter is sent in the interest of shareholder security so you can let us know if we have made any changes you did not ask for.
For and on behalf of
Shareholder Security Team
I haven’t instructed them to make any changes, but I do have two new shareholdings with instructions to pay dividends direct to my bank account. If it’s genuine it’s good they’re taking care of security, but I can’t verify it.
- There is no reference to what shareholding they might be talking about.
- I can’t verify that phone number. Google finds it not on Capita’s pages, but in a list of 0208 numbers that have had complaints against them, which doesn’t exactly inspire me to ring it.
This is almost as bad as Verified by Visa. Not quite as bad: the fraudster still has a way to go from convincing me to ‘phone their number to getting their hands on my assets. But it’s the same principle: as soon as I respond to a letter, I’m doing exactly what a fraudster needs me to do to fall victim. And of course, when I ‘phone the fraudster’s number, they will naturally need to ask a bunch of sensitive questions to verify I am really me: sufficient to identify me, and if they’re good at blagging they might get a whole lot more.
To follow this up, I started with Google and Capita, through which I established to my own satisfaction that the Capita Registrars website was genuine. Searching it for contact information I could safely use, I found the choice of a couple of email addresses, or ‘phone numbers. Or could I check it all myself online?
I tried signing up for Capita’s online shareholder services: if I can verify my shareholdings and associated payment details, I can see for myself whether the letters really need following up! I’ve tried that before, but this time I carried it through. I am indeed similarly signed up with other registrars: ComputerShare’s online service which works to a satisfactory level, and Equiniti’s which is amazingly bad but might at least have been sufficient to follow up these letters.
Signing up for this online service, I first gathered together all my Capita-issued share certificates. Ten of them (seven distinct holdings; eight distinct stock codes). Following the signup procedure, I entered the details for one of them and created an account. From there I was able to verify that that shareholding was in order, but I was completely unable to access any other holding.
After trying every bloomin’ path in the system, I logged out, and tried logging back in using another share certificate. It rejected the username/password I’d just created! Seems the system requires me to create a separate account for every holding. Indeed, not merely create it once, but log in eight separate times – each a complex process – any time I get a shareholder security letter in future.
Well, bugger this: surely I must be missing something???? OK, try emailing. That got me an automated reply promising attention within 48 hours. The following day a human reply, offering to ‘phone me and follow up on points I’d raised. Great, I’m getting somewhere!
I took up the offer and they duly ‘phoned. We were quickly able to trace the matter of the two letters to my new shareholdings, thus resolving the original issue. I also raised my concerns about their system: letters indistinguishable from phishing, scarce information with which to follow up, and is their online system really as useless as it seems?
Encouragingly, the lady I spoke to sounded good: she wasn’t some call-centre drone reading from a script, and she sounded receptive to my points about phishing and unverifiable information. She told me they were proud never to have suffered fraud, but that begs the question of how you count responsibility for a phishing victim who subsequently suffers identity theft but not loss of the specific shares. I stressed that if it hasn’t happened yet, it can only be a matter of time.
On the question of their online services she confirmed yes, amazingly, they really are that bad!
Let’s see if anything changes following my call ….
 By posting here I’m creating another google result for anyone seeking to verify that number. If you found it at random through a search, you probably don’t know me. Am I who I seem, or part of the fraudster’s operation?
Traditionally in the UK, one of the biggest aids to starting or growing a business is to own your own house. That’s because in our upside-down economy, you can borrow money on much more favourable terms for an unproductive mortgage than to invest in productive business. So you would use that to finance your startup, or be at a disadvantage.
With house prices crashing and mortgage lending turned suddenly more cautious, that’s no longer the case. Indeed, if you want to finance a business, you might (almost) just as well tell the bank manager the truth and present a business plan. Or maybe not the bank manager at all: there are other sources of funding. With unfair competition from the banks taking a knock, suddenly there’s a whole new niche for venture capital and other such investors.
In the UK, that include Venture Capital Trusts (VCTs), which offer significant tax advantages to investors, in return for investing in unlisted smaller businesses. The tax breaks reflect the fact that they’re traditionally higher-risk than big PLCs, and that they have low liquidity. But a VCT, like a unit trust, serves to spread the risk. I decided some time ago to invest some money in VCTs, towards the end of the tax year.
For those of us who care about “green” issues, a VCT that stands out is Foresight, which specialises in environmental businesses. I just wrote the cheque to subscribe to their current offer. That’s three boxes ticked: save tax, save the environment, help small business. And hopefully a fourth: make good money for me.
I expect I shall subscribe to one more VCT within the current tax year, but I have yet to decide which amongst those with current offers open.
 Fractional reserve banking – the bank lends money that doesn’t actually exist, on the premise that it comes into existence as repayments are made. Works until bad money drives out good and it becomes a pyramid.