Venture Capital Trusts (VCTs) attracted £917.7 million in the 2025/26 tax year, marking the third-highest year on record for fundraising, according to the Association of Investment Companies (AIC).
Top performers included Albion VCTs with £90 million raised, British Smaller Companies VCTs with £85 million, and Octopus Apollo VCT at £82.7 million. Since their introduction in 1994, VCTs have invested over £12 billion into early-stage UK businesses, supporting innovation and growth in the private sector.
However, the government’s decision to reduce the income tax relief on VCT investments from 30% to 20% is expected to have a significant impact on future fundraising, analysts warned.
“VCTs have long played a critical role in funding British start-ups, but the cut in tax incentives could dampen investor appetite,” said one industry expert.
The strong performance in 2025/26 reflects ongoing demand among investors seeking both tax-efficient returns and exposure to high-growth private companies, even amid policy uncertainty.
Alex Davies, Founder and CEO of Wealth Club, said:“The latest figures from the AIC show that £917.7 million was invested into Venture Capital Trusts in the 2025/26 tax year, making it one of the strongest years on record. This highlights the continued importance and appeal of VCTs for UK investors, particularly in a higher-tax environment.
The biggest raiser this year was Albion VCTs (£90m), followed by the British Smaller Companies VCTs (£85m) and Octopus Apollo VCT (£82.7m across two offers), demonstrating strong demand for well-established managers with proven track records.
VCTs play a vital role in the UK economy. In return for generous tax reliefs, investors provide capital that is deployed into early-stage and scaling UK businesses. Since their inception in 1994, VCTs have channelled more than £12 billion into ambitious companies across the UK. These businesses are crucial to economic growth, creating high-quality jobs and driving innovation across a wide range of sectors.
However, there is now a significant challenge facing the VCT market – and it is no longer a distant risk, but a reality. In the November Budget, whilst some VCT rules were improved, the Chancellor also announced that income tax relief on VCT investments will fall from 30% to 20% from this tax year.
History shows the potential consequences of such a move. The last time income tax relief was reduced, in 2006/07, VCT fundraising fell by 65% year-on-year. While the impact this time may be less severe – given today’s higher tax environment and fewer alternative tax-efficient investment options – we still expect a material decline in annual VCT investment.
This would be a negative outcome not only for investors, but for the broader UK economy. VCTs have been one of the UK’s most successful long-term investment schemes, supporting thousands of growing businesses and contributing meaningfully to employment and economic expansion.
We struggle to see the logic behind this policy decision. The projected tax revenue gain is relatively small – around £120 million per year – yet the potential damage to the funding ecosystem for start-ups and scale-ups, and the knock-on effects for growth and job creation, could be far greater.
We would strongly urge the Chancellor to reconsider this reduction in tax relief and continue to support a scheme that has delivered clear and lasting benefits to the UK economy.”
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