- Fund raising is only slightly down on last year's record breaking amount
- Tax relief remains a huge appeal but investors face new risks
Economic gloom has done little to discourage investors from piling into the latest venture capital trust (VCT) offers, with fundraising going strong as the end of the tax year approaches. The amount raised by VCTs this tax year stood at £597mn as of 16 January, only slightly down from the £606mn taken for the equivalent period last year, when the vehicles would go on to raise a record amount.
There’s perhaps good reason for this enduring appeal: frozen tax thresholds leave investors with fewer places to put their cash, and a requirement to hold a VCT for five years to benefit from its generous tax reliefs should instil in buyers the long-term mentality required to look past current challenges. As a reminder, VCT shares come with a 30 per cent upfront income tax relief on the amount you invest, provided you hold them for at least five years. Dividends and capital gains can also be taken tax-free.