Venture Capital Trusts can help the UK’s productivity problem, experts have said, after welcoming the government’s decision to extend the tax relief for investors.

In the “mini” Budget earlier this month, the chancellor signalled the sunset clause that would stop the tax breaks available to VCT investors will be extended beyond 2025.

VCTs invest in higher risk unquoted companies and come with a 30 per cent tax relief if the investments are held for five years, with any dividends earned also tax free.

The sunset clause was created as part of European Union state aid, and rules that VCT relief is only available to subscribers in the VCT for shares issued before April 6, 2025.

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