£1.122 billion was invested into VCTs in the 2021-22 tax year, HMRC figures show

£1.122 billion was invested into VCTs in the 2021-22 tax year, a 68% increase from the year before – official HMRC figures published today.

Key points from HMRC publication:
    • VCTs issued shares to the value of £1.122 billion in the last tax year, (2021/22), a 68% increase when compared to the £668 million in the previous year.
    • The amount of investment raised by VCTs has increased year-on-year, even though the number of companies operating as Venture Capital Trusts (VCTs) decreased to 52, from 57 a year earlier, and the number of schemes launched to raise funds increased to 46 (from 40 a year earlier). 
    • 19,475 UK investors claimed tax relief on £640 million of VCT investment in the 2020-21 tax year (the latest figures available), a 9% increase from a year earlier. 
    • 83% of investors tend to invest under £50,000 into VCT The average amount invested by an individual in 2020-21 (the latest figures available) was around £33,000, although one in six investors invested between £5,000 to £10,000.

VCTs are a government scheme launched to encourage investment into businesses in need of next stage funding to boost entrepreneurial activity with tax breaks for investors willing to accept the higher risks in pursuit of high rewards.

The scheme which was introduced in 1995, is one of four tax-based venture capital schemes and the VCTs raise funds for investments, normally annually, through new and/or top-up share issues to investors.

The research which can be viewed here.

Alex Davies, CEO and founder of Wealth Club, said: 

“Having raised £1.122 billion this tax year, VCTs are really edging into the mainstream. They are packed with some of the fastest growing and most exciting early stage UK businesses and can complement an existing pension and other more mainstream investments as well as provide investors with an attractive tax free income stream.  

“Wealth Club’s own figures published in April had already shown that the last tax year was a bumper year for VCTs and the official figures released by HMRC today highlight the extent to which the scheme is working.

“Businesses raising money from VCTs over the past year include Outpost VFX, creating visual effects for film and TV, Peckwater Brands, a delivery franchise for kitchen operators, Peppy, which is supporting individuals to access health experts on issues such as fertility and menopause, and Popsa’s photobooks.

“These numbers are really promising for the British economy and investors alike and really demonstrate the success of the scheme.

“Despite economic uncertainty demand for VCTs in the current tax year is also holding up and we expect it to be another bumper year.”

The number of VCTs raising funds in 2020-21 has increased from the previous tax year to 46 from 40. There has been a significant increase in the amount raised by VCTs in 2021 to 2022, though only a small number more raised funds, reflecting further concentration of the VCT market. 

 

Kindly shared by Wealth Club

Main article photo courtesy of Pixabay