It has been a golden time for VCTs with near record fundraising in the 2017/18 tax year, with VCTs raising £728 million, the highest amount ever raised at the current 30% level of upfront tax relief. This is the second highest amount raised since the inception of VCTs and a 34% increase on last year’s figure of £542 million. This is a testament to the demand for VCTs from investors and follows hard on the heels of the government’s crucial recognition of VCTs as effective providers of patient capital in the November 2017 Budget. So what’s been driving this demand?

This year’s bumper fundraising was boosted by uncertainty about the government’s Patient Capital Review as there were rumours ahead of the Autumn Budget in 2017 that the Chancellor would change the tax reliefs on VCTs. Clearly, some advisers made sure their clients subscribed for their VCT shares early to avoid any potential changes to tax reliefs. However, VCT fundraising remained robust after November when the government confirmed that VCTs’ tax benefits would remain in place and recognised VCTs’ important role in providing patient capital. The government also introduced some significant rule changes, which were mostly introduced on 6 April 2018 with some held back for 2019.

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