Venture Capital Trust flows up 9.2% as tax year end approaches

£632 million has been invested into Venture Capital Trusts (VCTs) so far this tax year, this represents a 9.2% rise year-on-year

Alex Davies, CEO and Founder of Wealth Club said, “£632 million has been invested in VCTs so far this tax year, up 9.2% on the same time last year. It’s a return to trend after a couple of sluggish post-pandemic years.

Rising interest rates have hit the valuations of smaller, higher growth businesses – but demand for VCTs remains robust.

With taxes at a 70-year high this is hardly a surprise. The massive cuts in CGT and dividends tax-free allowances are savaging peoples’ investments.

On top of that, the rate of CGT has gone up.  For those who maximise their pension and ISA allowances each year, VCTs are the obvious next step. When you invest in a VCT you receive income tax relief of up to 30% so on a £10,000 investment you could get £3,000 back in tax. All gains and income are also tax free. Unlike pensions and ISAs, the allowance is extremely generous and simple, you can invest up to £200,000 a tax year into a VCT, getting up to £60,000 in tax relief.

But don’t think of it like a nice tax wheeze for the rich. The government only provides these generous tax reliefs because it pays off in spades. The more money goes into fast-growing startups, the more jobs they create, the more economic prosperity for the country as a whole.”

Companies that have raised money through VCTs in the last year, include pre-mixed cocktails; ‘Moth’; women’s fashion brand ‘With Nothing Underneath’, and ski-holiday specialists ‘Heidi’.