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VCT fundraising dips 18% to £882m but remains third highest on record


VCT fundraising reached £882m in the 2023/24 tax year, according to data from the Association of Investment Companies. The AIC noted the last tax year marked the third highest fundraising by VCTs, despite falling 18% from just over £1bn in 2022/23.

The sector's record was reached in the 2021/22 financial year, when fundraising hit £1.1bn, meaning that in the last three tax years, VCTs raised more than £3bn.

Richard Stone, CEO of the AIC, said: "The continued strong fundraising by VCTs will be a great benefit to the UK's innovative young businesses in a challenging environment. This support has an impact beyond the businesses that receive funding, delivering wider economic, social and environmental benefits as well. The young businesses that VCTs support create jobs, boost the development of skills and knowledge, and increase exports and tax take across many vital sectors, including healthcare and technology."

Chris Lewis, chair of the VCT Association, added that despite fundraising slowing, VCTs are "showing their worth and outperforming the trend". He noted growth companies have an outsized "impact on innovation and job creation", demonstrating the value being delivered by VCTs.

Last year's fundraising was also helped by investors who had been sitting "on the sidelines for much of the year" and waited until the last possible day before pouring money into VCT before the 5 April deadline, noted Alex Davies, founder and CEO of Wealth Club.

"It is easy to see why VCTs remain attractive. If you are a wealthier investor, you are caught between higher taxes and reduced CGT and dividend tax allowances on the one hand and restrictions on where you can invest on the other," he argued. "Taxes are at a 70-year high and traditional investments like buy-to-let and pensions have been squeezed."

As such, Davies commended VCTs for their simplicity and tax efficiency, making them appealing to investors.

"But it is not just about saving tax," he continued, "VCTs are also exciting: you are backing some of Britain's youngest and brightest companies, and probably adding something completely different to your portfolio. New money into VCTs is great news for the British economy: young businesses create a disproportionate amount of jobs and economic growth."