Monday 08 April 2024 3:36 pm  |  Updated:  Monday 08 April 2024 3:38 pm

Venture Capital Trust fundraising at third highest ever amid 18 per cent drop

By: Elliot Gulliver-Needham

Venture Capital Trusts (VCTs) raised £882m this tax year, data from the Association of Investment Companies revealed, an 18 per cent drop from last year.

The tax year, which ended last week, still saw the third highest raise on record, beaten only by the record 2021/22 and 2022/23 tax years.

The fastest seller of the year was the Unicorn AIM VCT, which saw its £20m offer sold out in only 20 days.

Meanwhile, the largest VCT raise of the year was the Octopus Titan VCT at £106.8m, following by the British Smaller Companies’ £90m total.

This year’s haul bring the total raised by the vehicles over the last three years to more than £3bn.

Alex Davies, CEO of Wealth Club, the UK’s largest VCT broker, said the total had been bumped up by investors “who had been sitting on the sidelines for much of the year pouring money in at the last minute”, breaking his £850m expectation for the year.

This led investors to deposit £150m into VCTs just in the last two weeks.

Investors flock to VCTs at the end of the tax year due to their strong tax benefits.

You can claim up to 30 per cent upfront income tax relief on the amount you invest in VCTs, as long as you hold onto your shares for at least five years.

In addition, selling VCT shares is capital gains tax free, while any dividends issued by VCTs is also tax free.

Richard Stone, chief exec of the AIC, said that the strong fundraising from VCTs will “be a great benefit to the UK’s innovative young businesses in a challenging environment”.

“This support has an impact beyond the businesses that receive funding, delivering wider economic, social and environmental benefits as well,” added Stone.

“The young businesses that VCTs support create jobs, boost the development of skills and knowledge, and increase exports and tax take across many vital sectors including healthcare and technology.”