French highlighted that the VCT and Enterprise Investment Scheme (EIS) sunset clause was extended to 2035 during the Autumn Statement on 22 November 2023.
She emphasized that VCTs play a crucial role in supporting Britain’s economy by driving investment into smaller companies. Last November marked the 30th anniversary of VCTs, which have raised £12.5bn to fund thousands of small businesses, according to the Association of Investment Companies (AIC).
Introduced in 1995, VCTs are designed to encourage investment in qualifying UK businesses, offering investors attractive tax incentives as a reward for supporting early-stage growth. French noted that several successful companies, including Zoopla, Secret Escapes, and Virgin Wines, started with VCT backing.
For financial advisers, VCTs have become an essential tool. French described them as a “key part of an adviser’s toolkit” and mentioned that some advisers she knows have 20–30 clients invested in VCTs. While she believes VCTs are becoming more mainstream, she stressed they are only suitable for the “right client.”
She clarified that VCTs are not a replacement for pensions but can complement them within a diversified portfolio. More advisers are now incorporating VCT planning alongside pension planning, especially as tax hikes have led to increased discussions around securing tax relief.
