Stimulating investment risk-taking: What makes VCTs crucial in 2025

'The intention of the VCT scheme is to stimulate a culture of entrepreneurship' (Source Professional Adviser)

Jon Prescott shares why he believes 2025 is set to be the year of the VCT…

With key successes in 2024 laying the groundwork, Venture Capital Trusts (VCTs) are poised for even greater growth—especially for those focused on creating value for investors and seizing new opportunities.

As economic and political forces align around high-growth private markets, VCTs are taking center stage, offering targeted funding for innovation alongside valuable tax reliefs.

Pivotal VCT milestones in 2024

The Association of Investment Companies (AIC) reports that VCTs raised £882m in the 2023/24 tax year—making it the third-highest fundraising total, following £1.13bn in 2021/22 and £1.08bn in 2022/23. An impressive achievement, especially considering the uncertainty surrounding the future of VCTs during that period.

In July 2024, just nine months before their scheduled expiry, the European Commission approved a 10-year extension for the UK’s VCT and Enterprise Investment Scheme.

This decision underscored the government’s commitment to these schemes and the vital role VCTs play in bridging the equity gap for SMEs seeking early-stage funding.

With confirmed political backing, advisers and investors gained the clarity needed to fully leverage the benefits of VCTs.

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