Last year was dominated by disruption and uncertainty. But 2020 also saw venture capital trusts (VCTs), introduced 25 years ago to support small, innovative businesses, emerge as the investment of the moment.

Firstly, with tax rises of more than £40bn a year “all but inevitable”, according to the Institute for Fiscal Studies, VCT tax relief looks increasingly attractive. When investing in VCTs you receive up to 30% tax relief – a £3,000 saving on a £10,000 investment. All returns, typically paid through dividends, are also tax-free and you can invest up to £200,000 a year.

Secondly, VCTs invest heavily in the technology sector, one of the few to have largely dodged the Covid-19 bullet and likely to play a key part in any recovery. Indeed, many VCT-backed companies have experienced a surge in demand recently.

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