VCT investment up 2.3x compared to last year

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Archived article: please remember tax and investment rules and circumstances can change over time. This article reflects our views at the time of publication.

The demand for Venture Capital Trusts (VCTs) has rocketed this tax year (2017/18) and £474 million has already been invested. This is more than 2.3 times the amount at the same point last year, when less than £205 million had been raised.

The biggest fundraise to date is Octopus Titan VCT, which has raised £125 million, followed by Mobeus VCTs which have raised £72.8 million. Meanwhile Northern VCTs, Baronsmead, Octopus AIM, Unicorn AIM and ProVen VCTs have already filled or closed for the year.

VCT funds raised 2018 vs 2018 - chart

Why is this year so different to last? The rapid rise can be attributed to three main factors:

  1. Last year, many high profile VCTs did not raise funds because of VCT rule changes. Now they’ve had time to adjust and want to get out there and make the most of new opportunities
  2. Wealthy investors have started to feel the pain of the new pension restrictions so are opting for VCTs to increase their tax efficiency
  3. Following a Government review at the end of last year, there were fears that VCT tax relief might be reduced or the types of investments allowed might be restricted. Fortunately, this didn’t materialise – but it did mean investors got going early this year, ahead of any potential changes. 

The message is clear: if you want to invest in a VCT and see one you like, consider doing so now, rather than leaving it until later in the tax year when it may not be available. Although VCTs are filling up fast and a number have already closed, there are still some exceptional offers available with capacity.

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – tax-efficient investments. You should base your investment decision on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.

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