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AIC patient capital response: Delivering even better value for the Government

27 September 2017

AIC recommends measures to more effectively target EIS and VCT investments.

The Association of Investment Companies (AIC) has responded to HM Treasury’s consultation Financing Growth in Innovative Firms.  In its response, the AIC demonstrates how VCTs are an ideal means to raise much needed capital from retail investors to help smaller businesses grow.  The AIC has also proposed measures to ensure VCT and EIS investment is focussed even more closely on young, innovative businesses.  Key amongst these are a restriction on allowing VCT and EIS money to be used to purchase property.

Ian Sayers, Chief Executive of the Association of Investment Companies (AIC) said:

“Since 2015, when the rules for VCTs were last changed, VCTs have been investing in just the type of young, innovative businesses that the Government believes should be supported by tax-incentivised investment.  This investment promotes economic growth, with jobs in investee businesses more than doubling after VCT investment, as well as boosting tax receipts which offset the cost of the tax reliefs.

“VCTs also do not automatically return capital to investors on the disposal of a successful investment, but often reinvest this money in new businesses with no further upfront tax relief.  However, without the initial upfront relief, much of this vital investment would simply not have happened.

“VCTs therefore already offer excellent value for money to the Treasury but, as the largest investor in the scheme through its generous tax reliefs, it is only right that Government should consider ways to make the scheme as effective and efficient as possible.  Our proposal to end all investment to purchase property, and the other measures in our paper, will ensure that future VCT investment will be focussed on supporting the development of groundbreaking technologies.”

Please see the AIC’s response to HM Treasury’s Financing Growth in Innovative Firms

For additional information on the economic benefits of VCTs, and examples of the innovative, young businesses being supported, see a review of Venture Capital Trust (VCT) investment from the Association of Investment Companies (AIC), ‘Transforming small business’.


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  1. The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment.  Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs.  The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help members add value for shareholders over the longer term. The AIC has 352 members and the industry has total assets of approximately £174 billion.
  2. Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance. The value of investment company shares, and the income from them, can fall as well as rise. You may not get back the full amount invested and, in some cases, nothing at all.


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