VCT income tax relief dropping to 20%: what's happening and what could investors do?
From 6 April 2026, the rate of VCT (Venture Capital Trusts) income tax relief is being cut from 30% to 20%.
If you are considering investing in VCTs, these last few weeks before the end of the tax year could be the last opportunity to receive income tax relief at the higher rate of 30% – a tax break worth up to £60,000 if using the full £200k VCT allowance – and tax-free dividends (dividends are variable and not guaranteed).
It may be prudent to act promptly. The longer you leave it, the less choice you will have, as VCT offers reach capacity and close. If you delay beyond the end of the tax year, you will miss out on the current 30% rate of income tax relief, if these changes go ahead.
Below we explain the changes in more detail.
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.
How is VCT income tax relief changing?
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.
Under current rules, when you invest, you could currently receive:
- Up to 30% income tax relief – a saving of up to £60,000 on your income tax bill when you invest in newly issued VCT shares
- 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.
What is changing?
No changes have been announced regarding tax-free dividends and tax-free growth. The changes coming into effect on 6 April 2026 only affect the rate of income tax relief, which is reducing from 30% to 20%.
So, in the new tax year, someone investing the full £200,000 allowance would see their income tax relief reduced from £60,000 to £40,000.
Are these changes definitely going ahead?
The investment industry has reacted with severe concern to the government’s decision to reduce upfront income tax relief. While the increase in investment limits for companies was welcomed, key figures in the industry, including the Association of Investment Companies (AIC), the Venture Capital Trust Association (VCTA), several VCT managers and Wealth Club have warned that the cut in tax relief is a "retrograde move" that could stifle, not boost, investment in high-growth UK companies.
There have been increasingly pressing calls for the government to revert the change. These have been so far fruitless. Unless the government makes any announcements, investors should assume early April marks the last opportunity to benefit from up to 30% income tax relief.
Other VCT changes introduced in the October Budget
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 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 funding a company can receive in a year.
- Lifetime investment limit: this is a cap on the amount of VCT funding a company can receive ever.
The remaining VCT qualifying rules – e.g. to do with company age, number of employees, etc. – remain unchanged. The same changes also apply to EIS.
As a result of these changes, VCTs portfolios could become more resilient, as managers are able to invest in comparable larger and more established companies, and to continue backing the winners for longer – not guaranteed.
| Currently (up to 5 April 2026) | From 6 Apr 2026 | |
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| Gross assets |
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Annual investment limit |
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| Lifetime investment limit |
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Featured
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%
|
£84.7m / £90m
94% full
Overallotting
|
£6,000
|
Limited capacity remaining
|
|
Baronsmead VCTsAmongst the longest-standing and most diverse VCTs with exposure to private and AIM companies Find out more |
7% of NAV
|
1.5%
|
3.0%
|
0.15%
|
£26.7m / £40m
Overallotting
|
£5,000
|
30 Mar 2026 (9am) for next allotment
|
|
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
|
3%
|
2.5%
|
0.10%
|
£29.4m / £50m
Overallotting
|
£5,000
|
2 Apr 2026 (9am) for 2025/26; up to 0.6p dividend
|
|
Mobeus VCTs – now Gresham House VCTsLong-established trusts investing across different sectors and stages of maturity. Find out more |
7% of NAV
|
0.5%
|
2.5%
|
0.10%
|
£23.4m / £65m
|
£6,000
|
31 Mar 2026 (10am) for 2025/26
|
|
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% existing investors)
|
3% (2.5% existing investors)
|
0.10%
|
£79.8m / £80m
99% full
Overallotting
|
£6,000
|
Very limited capacity remaining
|
|
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
|
2.5% (3.5% existing investors)
|
3% (2% existing investors)
|
0.10%
|
£55.3m / £75m
|
£5,000
|
23 Mar 2026 (5pm) for 2025/26
|
|
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%
|
£27m / £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%
|
£10.9m / £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%
|
£21.6m / £30m
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%
|
£84.7m / £90m
94% full
Overallotting
|
£6,000
|
Limited capacity remaining
|
|
Baronsmead VCTsAmongst the longest-standing and most diverse VCTs with exposure to private and AIM companies Find out more |
7% of NAV
|
1.5%
|
3.0%
|
0.15%
|
£26.7m / £40m
Overallotting
|
£5,000
|
30 Mar 2026 (9am) for next allotment
|
|
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
|
3%
|
2.5%
|
0.10%
|
£29.4m / £50m
Overallotting
|
£5,000
|
2 Apr 2026 (9am) for 2025/26; up to 0.6p dividend
|
|
Mobeus VCTs – now Gresham House VCTsLong-established trusts investing across different sectors and stages of maturity. Find out more |
7% of NAV
|
0.5%
|
2.5%
|
0.10%
|
£23.4m / £65m
|
£6,000
|
31 Mar 2026 (10am) for 2025/26
|
|
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% existing investors)
|
3% (2.5% existing investors)
|
0.10%
|
£79.8m / £80m
99% full
Overallotting
|
£6,000
|
Very limited capacity remaining
|
|
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
|
2.5% (3.5% existing investors)
|
3% (2% existing investors)
|
0.10%
|
£55.3m / £75m
|
£5,000
|
23 Mar 2026 (5pm) for 2025/26
|
|
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%
|
£27m / £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%
|
£10.9m / £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%
|
£21.6m / £30m
Overallotting
|
£3,000
|
2 Apr 2026 (11am) for 2025/26
|
|
| View ALL Venture Capital Trusts OFFERS | ||||||||
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, sell or hold 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.