MICAP has launched a digital application service for Venture Capital Trusts (VCTs).
This service allows MICAP’s customer base, of more than 1,000 financial advice and wealth management firms, to invest its clients directly through the platform.
MICAP is a provider of research and reporting solutions to financial advisers and wealth managers, recommending tax-advantaged products.
On 2023, MICAP launched its digital application service for enterprise investment scheme (EIS) funds.
Advisers who use the platform can invest across multiple EIS funds and VCTs “using a single digital application form”.
MICAP said: “Client details are saved and will pre-populate the application form the next time the adviser recommends a product for that client. Advisers can also track the applications to see if they have been viewed or digitally signed by the client, or if signed applications have been viewed or accepted by the product provider.”
MICAP director Alan Sheehan added: “Currently advisers have three main options: paper applications with wet signatures, single-use digital application forms provided by the VCT registrars, or investing via a platform. The first two are very time consuming, constrain diversification and require starting from scratch each tax year. The third option typically carries additional costs borne by the investor that can be prohibitive, especially under Consumer Duty.
“We are delighted to better support our customers by providing a solution that saves them time without creating additional costs for their clients.”
Sheehan also added that the government recently showed its commitment to EIS and VCTs by extending the Sunset Clause until 2035.
In November 2023, chancellor Jeremy Hunt extended the VCT and EIS sunset clause to 2035 during the Autumn Statement.
He also hopes that MICAP’s digital application service will help “eliminate some of the barriers that can restrict advisers from investing in these funds”.
In January 2024, Puma Capital founder and chief executive David Kaye said there are advisers who have never engaged with the VCT and the EIS markets.
This is due to some advisers being reluctant to explain what they are due to the “complexity” behind them.
Credit Suisse UK head of wealth planning Dan Barnes said: “This is a necessary innovation for the tax-advantaged market. The clients that these types of investments are suitable for are very likely to need them year in and year out.
“However, the status quo is unnecessarily inefficient – with large amounts of duplication across application forms and untold time wasted entering it for the same clients each year. This will make our lives much easier and provide a consistent investor experience at the same time.”
In July 2023, Defaqto acquired MICAP.
Additionally, VCTs are investment vehicles that were set up to promote investment in small UK businesses that meet certain criteria.
To encourage support for these businesses, the government offers generous tax benefits.
EIS also offers 30% income tax relief.
