SMEs to benefit from record funding as VCTs raise over a billion in 2021/22 tax year

VCTs raise £1.13bn in the tax year to 5 April 2022

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Today the Association of Investment Companies (AIC) published the amount of money raised by VCTs in the 2021/22 tax year. VCT fundraising has passed the £1 billion milestone for the first time, raising £1.13 billion (£1,133 million) to be invested in small and innovative UK companies.

This represents a 65% increase compared with the 2020/21 tax year (£685 million) when the pandemic had an impact on fundraising. It is a 45% increase on the previous record of £779 million in 2005/06 when the tax relief on VCT investments was 40% and an increase of 55% on 2018/19 when £731 million was raised, the highest amount when the tax relief was 30%, the same as it is today.

During 2021 VCTs invested £668.6 million in new and follow-on investments in the UK’s small private companies and Alternative Investment Market (AIM) companies. In January and February 2022, VCTs invested £106.6 million in new and follow-on investments in small private companies and AIM companies.

Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said: “This record level of VCT fundraising is excellent news for the UK’s small and fast-growing businesses. VCTs provide much-needed support to the businesses they back and last year invested just under £670 million in small private companies and AIM companies. These companies deliver important economic and social benefits to the UK which range from exports and increased tax take to cutting edge technology and job creation in sectors as diverse as healthcare, online retailing and green technology.

“Following the pandemic and at a time of rising prices, demand for VCTs is at an all-time high demonstrating the many benefits they bring to investors. After the last two tough years, investors are particularly interested in VCTs which support entrepreneurs and help build back the economy. VCTs have been in existence for over 25 years and have demonstrated strong long-term performance, with the average VCT returning 155% over the last ten years.” 

Historic VCT fundraising excluding enhanced share buy-backs

Tax year

Fundraising (£millions)

2021/22

1,133

2020/21

685

2019/20

619

2018/19

731

2017/18

728

2016/17

542

2015/16

457

2014/15

429

2013/14

420

2012/13

269

2011/12

267

2010/11

354

2009/10

338

2008/09

154

2007/08

220

2006/07

267

2005/06

779

2004/05

505

2003/04

50

2002/03

65

2001/02

125

2000/01

433

1999/2000

270

1998/99

165

1997/98

190

1996/97

170

1995/96

160

For more information on VCTs, read the AIC’s guide
or watch ‘Venture Capital Trusts Explained’.

 

-ENDS-

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Notes to editors:

  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 361 members and the industry has total assets of approximately £265 billion.
  2. Performance data is share price total return for the average VCT to end March 2022. Source: AIC/Morningstar.
  3. 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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