Budget 2025: Cut to tax relief from 30% to 20% undermines VCT scheme
The AIC has strongly criticised the Chancellor’s decision.
The Association of Investment Companies (AIC) has strongly criticised the Chancellor’s move to cut upfront income tax relief on venture capital trusts (VCTs) from 30% to 20%.
Cutting upfront tax relief on VCT shares from 30% to 20% undermines the incentive to invest in VCTs. Individuals and advisers will be less willing to support high-risk young companies that will struggle to find funding from other sources.
Richard Stone, Chief Executive of the Association of Investment Companies (AIC)
Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said: “The VCT scheme invests billions of pounds in up-and-coming UK companies. Cutting upfront tax relief on VCT shares from 30% to 20% undermines the incentive to invest in VCTs. Individuals and advisers will be less willing to support high-risk young companies that will struggle to find funding from other sources. Far from nurturing economic growth as the Chancellor wants, it will cut off vital funding for ambitious, growing companies.
“We welcome the Chancellor’s decision to expand the VCT investment limits and increase the size of companies that VCTs can invest in. But this will all be in vain if VCTs can’t raise funds from investors and advisers.
“Last time the amount of upfront tax relief was cut, from 40% to 30%, the amount of money raised fell by two-thirds, and it did not recover to its previous levels for another 16 years. We urge the Chancellor to reconsider her decision without delay.”
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- The Association of Investment Companies (AIC) represents a broad range of investment trusts and VCTs, collectively known as investment companies. The AIC’s vision is for closed-ended investment companies to be understood and considered by every investor. The AIC has 286 members and the industry has total assets of approximately £272 billion.
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