Budget 2025: last chance for up to 30% VCT income tax relief
In today’s Budget, the Chancellor announced a package of tax changes to support scaling companies to attract investment and talent.
The government is increasing the amount of capital VCT and EIS companies can receive, to help them grow beyond the start-up stage.
This welcome news was, however, weighed down by the announcement that from 6 April 2026, Venture Capital Trust (VCT) tax relief will reduce from the current 30% to 20%.
As things stand, this tax year is the last chance for VCT investors to secure income tax relief at the higher rate of 30%.
Separately, VCTs will continue to offer tax-free dividends. And this tax perk could become even more valuable once the dividend tax rate increase of 2% to the ordinary and upper rates will become effective from April 2026 (read our article on dividend tax increase).
Tax rules can change and benefits depend on circumstances. This is a brief outline based on current rules: there are detailed conditions and rules you should consider carefully before investing. Decisions should be based on the investment merit, not the tax reliefs alone.
Important: The information on this website is for experienced investors. It is not a personal recommendation to invest. If you’re unsure, please seek advice. Investments are for the long term. They are high risk and illiquid and can fall as well as rise in value: you could lose all the money you invest. Tax rules can change and benefits depend on circumstances.
Invest up to £200k, save up to £60k – but only until 5 April 2026
A Venture Capital Trust (VCT) is a company listed on the London Stock Exchange that in turn invests in young, innovative, usually privately-owned companies. It is akin to an investment trust but invests in smaller and younger, therefore riskier, companies.
The government offers generous tax breaks to encourage investment into dynamic British enterprise. This is bearing fruit as many experienced investors include VCTs in their tax-planning – in the last tax year (2024/25) investment reached nearly £900 million, the third-highest VCT fundraising total on record.
When you invest, you could currently receive:
- Up to 30% income tax relief – save up to £60,000 on your income tax bill when you invest in newly issued VCT shares (but the rate of tax relief is reducing to 20% from 6 April 2026)
- Tax-free dividends – no need to declare VCT dividends on your tax return and they won’t use up your dividend allowance, which is currently £500 (note, dividends are variable and not guaranteed)
- Tax-free growth – no CGT on gains
You must have sufficient income tax liability to offset, and the shares must be held for at least five years. Tax rules can change and benefits depend on circumstances.
Featured
Below we list our ‘Featured Offers’; marked with a gold ‘W’, are the current offers we consider to have the most investment merit – this is not personal advice and you should form your own view.
Help young and ambitious companies grow and receive up to 30% income tax relief, tax-free dividends and tax-free growth. Tax rules can change and benefits depend on circumstances; dividends are not guaranteed.
= Featured Offer
| VCT name | Target dividend | Wealth Club initial saving | Net initial charge | Annual rebate | Funds raised / sought | Minimum investment | Next deadline | Invest now |
|---|---|---|---|---|---|---|---|---|
Albion VCTsLong-established VCTs with a diversified portfolio of technology and scale-up companies Find out more |
5% of NAV
|
–
|
3%
|
0.10%
|
£55.9m / £90m
Overallotting
|
£6,000
|
24 Mar 2026 (9am) for next allotment
|
|
Baronsmead VCTsAmongst the longest-standing and most diverse VCTs with exposure to private and AIM companies Find out more |
7% of NAV
|
2% (2.25% existing investors)
|
2.5% (2.25% existing investors)
|
0.15%
|
£18.2m / £30m
|
£5,000
|
Limited early bird capacity
|
|
Maven VCTsLong established VCTs managed by one of the largest investment teams in the VCT sector, and diversified portfolio of 100+ private and AIM-quoted regional companies Find out more |
6% of NAV
|
4.25% (4.5% existing investors)
|
1.25% (1% existing investors)
|
0.10%
|
£15m / £30m
|
£5,000
|
12 Jan (9am) for Jan 2026 allotment
|
|
Northern VCTsAmong the longest-running VCTs, with a strong investor following, managed by Mercia Ventures Find out more |
4.5% to 5% of NAV
|
2.5% (3.0% existing investors)
|
3% (2.5% existing investors)
|
0.10%
|
£55.2m / £80m
Overallotting
|
£6,000
|
Extra capacity
|
|
Octopus Apollo VCTManaged by Octopus Ventures, the UK’s second-largest VCT targets revenue-generating businesses with a focus on B2B software companies Find out more |
5% of NAV
|
3.5% (4.5% existing investors)
|
2% (1% existing investors)
|
0.10%
|
£37.3m / £75m
|
£5,000
|
30 Jan 2026 for 1% early bird
|
|
Pembroke VCTVCT seeking to back young companies developing brands in the consumer, technology and business services sectors Find out more |
5p per share
|
2%
|
3%
|
0.10%
|
£17.6m / £40m
|
£5,000
|
2 Apr 2026 (noon) for 2025/26
|
|
ProVen VCTsEstablished VCTs with a track record of investing in growth capital companies, particularly e-commerce. Find out more |
5% of NAV
|
2.5%
|
3%
|
0.10%
|
£6.1m / £30m
|
£5,000
|
1 Apr 2026 (noon) for 2025/26
|
|
Triple Point Venture VCTA VCT investing primarily in B2B companies from an early stage in their lifecycle Find out more |
5% of NAV
|
3% (4% existing investors)
|
2.5% (1.5% existing investors)
|
0.10%
|
£13.7m / £20m
Overallotting
|
£3,000
|
2 Apr 2026 (11am) for 2025/26
|
|
| View ALL Venture Capital Trusts OFFERS | ||||||||
Help young and ambitious companies grow and receive up to 30% income tax relief, tax-free dividends and tax-free growth. Tax rules can change and benefits depend on circumstances; dividends are not guaranteed.
= Featured Offer
| VCT name | Target dividend | Wealth Club initial saving | Net initial charge | Annual rebate | Funds raised / sought | Minimum investment | Next deadline | Invest now |
|---|---|---|---|---|---|---|---|---|
Albion VCTsLong-established VCTs with a diversified portfolio of technology and scale-up companies Find out more |
5% of NAV
|
–
|
3%
|
0.10%
|
£55.9m / £90m
Overallotting
|
£6,000
|
24 Mar 2026 (9am) for next allotment
|
|
Baronsmead VCTsAmongst the longest-standing and most diverse VCTs with exposure to private and AIM companies Find out more |
7% of NAV
|
2% (2.25% existing investors)
|
2.5% (2.25% existing investors)
|
0.15%
|
£18.2m / £30m
|
£5,000
|
Limited early bird capacity
|
|
Maven VCTsLong established VCTs managed by one of the largest investment teams in the VCT sector, and diversified portfolio of 100+ private and AIM-quoted regional companies Find out more |
6% of NAV
|
4.25% (4.5% existing investors)
|
1.25% (1% existing investors)
|
0.10%
|
£15m / £30m
|
£5,000
|
12 Jan (9am) for Jan 2026 allotment
|
|
Northern VCTsAmong the longest-running VCTs, with a strong investor following, managed by Mercia Ventures Find out more |
4.5% to 5% of NAV
|
2.5% (3.0% existing investors)
|
3% (2.5% existing investors)
|
0.10%
|
£55.2m / £80m
Overallotting
|
£6,000
|
Extra capacity
|
|
Octopus Apollo VCTManaged by Octopus Ventures, the UK’s second-largest VCT targets revenue-generating businesses with a focus on B2B software companies Find out more |
5% of NAV
|
3.5% (4.5% existing investors)
|
2% (1% existing investors)
|
0.10%
|
£37.3m / £75m
|
£5,000
|
30 Jan 2026 for 1% early bird
|
|
Pembroke VCTVCT seeking to back young companies developing brands in the consumer, technology and business services sectors Find out more |
5p per share
|
2%
|
3%
|
0.10%
|
£17.6m / £40m
|
£5,000
|
2 Apr 2026 (noon) for 2025/26
|
|
ProVen VCTsEstablished VCTs with a track record of investing in growth capital companies, particularly e-commerce. Find out more |
5% of NAV
|
2.5%
|
3%
|
0.10%
|
£6.1m / £30m
|
£5,000
|
1 Apr 2026 (noon) for 2025/26
|
|
Triple Point Venture VCTA VCT investing primarily in B2B companies from an early stage in their lifecycle Find out more |
5% of NAV
|
3% (4% existing investors)
|
2.5% (1.5% existing investors)
|
0.10%
|
£13.7m / £20m
Overallotting
|
£3,000
|
2 Apr 2026 (11am) for 2025/26
|
|
| View ALL Venture Capital Trusts OFFERS | ||||||||
Budget changes at a glance: tax relief
In the Budget, the Chancellor introduced a number of changes that apply to both VCTs and EIS.
The only change that affects tax relief is the cut in the rate of VCT income tax relief from 30% to 20%.
Below we provide a quick summary of tax reliefs available through VCTs and EIS, in the current tax year and from 6 April 2026. This also includes the cap on EIS IHT relief introduced in the Budget 2024.
Tax rules can change and benefits depend on circumstances.
| VCT (2025/26) | VCT (from 6 Apr 2026) |
EIS (2025/26) | EIS (from 6 Apr 2026) |
|
|---|---|---|---|---|
| Maximum investment per tax year | £200k | £200k | £2m* | £2m* |
| Carry back | no | no | available | available |
| Income tax relief | up to 30% | up to 20% | up to 30% | up to 30% |
| CGT relief/deferral | no | no | deferral | deferral |
| Tax-free dividends | yes | yes | no | no |
| Tax-free growth | yes | yes | yes | yes |
| IHT relief | no | no | yes | Capped at £1m |
| Loss relief | no | no | yes | yes |
* Provided anything over £1 million is invested in Knowledge Intensive companies.
This is a brief outline based on current rules: there are detailed conditions and rules you should consider carefully before investing. If unsure, seek advice. These are high-risk investments and you should invest on the merits of the investment, not for the tax advantages alone.
Budget changes at a glance: increasing support for scale-up companies
In the Budget, the Chancellor also introduced measured intended to extend the support available to companies that are scaling up.
The changes are around three areas:
- Gross assets test: this is essentially a proxy for company size. To be able to receive VCT/EIS investment, a company needs to have gross assets – this includes all forms of property that appear on a company’s balance sheet – under a certain threshold, before and after allotting shares.
- Annual investment limit: this is a cap on the amount of VCT/EIS funding a company can receive in a year.
- Lifetime investment limit: this is a cap on the amount of VCT/EIS funding a company can receive ever.
The remaining VCT/EIS qualifying rules – e.g. to do with company age, number of employees, etc. – remain unchanged.
| VCT and EIS (2025/26) | VCT and EIS (from 6 Apr 2026) |
|
|---|---|---|
| Gross assets |
|
|
|
Annual investment limit |
|
|
| Lifetime investment limit |
|
|
Wealth Club aims to make it easier for experienced investors to find information on – and apply for – investments. You should base your investment decision on the offer documents and ensure you have read and fully understand them before investing. The information on this webpage is a marketing communication. It is not advice or a personal or research recommendation to buy any of the investments mentioned, nor does it include any opinion as to the present or future value or price of these investments. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.
Alex Davies
Chief Executive
Alex was a board director at Hargreaves Lansdown, where he worked for 15 years. He was responsible for building Hargreaves Lansdown into the biggest direct-to-consumer SIPP provider in the UK with more than 150,000 clients and over £12 billion under management. He is a keen investor with a portfolio of shares, funds, student property, EIS and VCT investments.