‘I left the RAF, retired early and fund my life through clever investing’

Richard uses his investments to fund his expensive hobby - Jay Williams Coming to the end of a stint in the military leaves many veterans at a loose end. Years of regimented living and institutionalisation lead some to opt for a career in corporate organisations, while others throw themselves into charities, politics or public service. Very few, however, set their sights on utilising their investments so that they can live off them entirely. But Richard Parry, now 77, is an exception. Having joined the Royal Air Force in 1968, Parry spent almost 20 years flying a Hercules plane. His missions involved resupplying the British Army during the Falklands War and deployments with the special forces. "I left [the RAF] in 1987, went to Hong Kong and made a few bob flying the 747 and the Airbus and then came back [to the UK] in 2000," he says. He was 38 when he left the RAF, and began living off his investments aged 51. "I haven't worked for the taxman since, because of my judicious investments," he says. Now his half a million pounds of pension, investments and the associated tax relief return him thousands each month, enough to cover his average annual tax bill of £20,000 to £30,000. As well as achieving financial independence and retaining as much of his hard-earned cash as possible, Parry funds his expensive air ballooning hobby, a craft he learnt during his time living in Asia.Richard Parry learnt how to be an air balloon pilot during his time living in Asia Parry invests in a niche area of the market, but one open to all British retail investors: venture capital trusts (VCTs). While he hasother investments such as a stocks and shares Isa, some rental income and an RAF pension, VCTs have always appealed as a smart way to reduce his HMRC bill. Structured as funds that funnel money into young companies and startups in the UK, VCTs offer investors attractive tax incentives to support early-stage British companies. VCTs boast tax-free growth, meaning that they are exempt from capital gains tax, provided investors' shares have been held for three years. Investors can also claim an upfront 20pc income tax relief on investments in VCTs. This was previously 30pc until Rachel Reeves, the former chancellor, cut the relief rate at the Budget in 2025. Peter Hicks, a research analyst at Chelsea Financial Services, says: "The combination of upfront income-tax relief, tax-free dividends and tax-free capital gains remains highly attractive. They also provide an opportunity to support some of Britain's most promising young companies." However, as supporters of startups, VCTs are regarded as a higher-risk investment than diversified funds that track the stock market's largest companies. Story Continues The average generalist VCT has returned 51.9pc in the past 10 years, but just 3.6pc in the past three years, according to data from investment service Wealth Club. By contrast, the FTSE 100 averages a return between 6pc and 8pc each year. VCTs can't be sold easily on the open market either. Instead, investors have to sell them to specialist brokers, making them harder to trade than shares. "I don't like paying tax and I'm reasonably financially astute," Parry says. "Ninety per cent more of the British population will not have heard of a VCT and even less will understand what they do or how they work." His savvy money management has earned him a house in the market town of Tenbury Wells, Worcestershire, with his wife, who has her own pension and Isa income. His military pension and investments have also allowed him to set up pensions and tax-efficient junior investment schemes for his grandchildren. Although the returns are not always much to boast about, Parry is in it for the tax relief. During a nine-year period where he owned the Maven Income and Growth VCT, it returned 5.8pc on average each year, which he deems a "reasonable" sum. Parry also ensures that he maximises his £20,000 annual Isa allowance and is careful to not throw all of his eggs into a single VCT basket by holding a range of the tax-efficient funds. The tax he is able to claw back has also funded numerous hot-air-balloon trips and competitions. Parry still gets up at 6am to fly a few times a month between April and October, weather permitting. In 2013, he claimed the Queen's Cup, one of the UK's oldest sporting prizes, which involves balloon pilots racing a 199-mile course from Bristol to Great Yarmouth.By using VCTs, Richard Parry has been able to fund numerous hot-air-balloon trips and competitions - Jay Williams Determined to almost eradicate his tax outlay from competition winnings and rental income, Parry worked out that he would need to put £60,000 into VCTs to recoup the £20,000 he was paying to HMRC. While his savvy fund picks allow him to keep almost all of what he makes from investments, strong performance years do incur an outlay to the taxman. "I'm actually starting to pay tax now because I'm making quite good money on investments, so it's not avoidable," he says. Labour's decision to reduce the amount of tax relief offered by VCT investments has also made him wonder whether his strategy will work long-term. "I am rethinking the modus operandi. Maybe [I will] relocate to Malta or Cyprus," he says. View Comments