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"This is a real shock": Amount of investment raised by VCTs decreases, HMRC reveals

ended 14. May 2025

HMRC has this morning published new data showing that Venture Capital Trusts (VCTs) issued shares to the value of £873 million in 2023 to 2024, a 17% decrease in comparison to the 2022 to 2023 figure of £1,051 million. It also revealed that, in 2023 to 2024, Venture Capital Trust (VCT) investors claimed Income Tax (IT) relief on £810 million of investment — a decrease of 19% from 2022 to 2023. Meanwhile, the number of VCTs raising funds has remained consistent in the 2023 to 2024 tax year. Newspage asked financial experts for their views, below.

3 responses from the Newspage community

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Colin LowVerified
Managing Director at Kingsfleet
This is a real shock. The general feeling is that VCTs have been benefiting from the reduction in pension funding capacity in recent years but this data appears to undermine that view. The tax year reporting also coincides with the increase in the Pension Annual Allowance limit from £40,000 to £60,000 and it may be that those who had been using VCTs as a tax-efficient method of savings when their pension limits were exhausted, returned to Pension Contributions once again. Furthermore, the performance of VCT arrangements in recent years has, at best, been mediocre and it may be that investors are not allowing the tax 'tail' to wag the investment 'dog'.
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Riz MalikVerified
Independent Financial Adviser at R3 Wealth
Investors are increasingly wary about the future of VCT tax reliefs. The previous Conservative government was supportive, but the outlook under Labour is less certain. Rising interest rates and cost of living pressures have also led many to reassess the level of risk they are prepared to take, even with tax-efficient investments.
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Tony RedondoVerified
Founder at Cosmos Currency Exchange
VCTs remain a high-risk, high-reward option, best suited for those with large portfolios and a long-term view. The latest HMRC data shows VCTs hit a £873M fundraising dip in 2023-24, down 17%, as economic jitters test investor nerve despite juicy tax perks. Despite the dip, the VCT scheme’s 2035 extension supports stability. High tax relief (30%) and CGT exemptions draw high-net-worth investors, though high fees (~5%) and risks (e.g., Octopus Titan VCT’s -14.1% return) deter some. VCTs remain vital for UK startups, but reliance on tax breaks and a niche investor base (6% drive 31% of funds) questions scalability. The sector is resilient but needs transparency to rebuild trust amid tax hikes and economic headwinds.