Demand for venture capital trusts (VCTs) has risen due to the introduction of the tapered annual pension allowance last year, which restricted the tax relief people earning more than £150,000 on pension contributions can receive. The annual investment limit on VCTs is £200,000, rather than between £10,000 and £40,000 - the amount higher earners can pay into a pension, and there are no lifetime limits on how much you can put into one.
VCTs also offer a number of tax benefits so are useful for investors who have exhausted their annual pension and individual savings account (Isa) allowances. If you hold a VCT new issue for five years you get 30 per cent tax relief to offset against your income tax bill. And VCTs pay tax-free dividends and do not incur capital gains tax when you sell their shares.
A number of VCT offers have recently been announced, including by the Albion VCTs, Downing One VCT (DDV1), the Mobeus VCTs and Octopus Titan VCT (OTV2). These four offers alone have the capacity to raise up to £378m. Also in the market are Downing Four VCT (D4OO), Elderstreet VCT (EDV), Foresight 4 VCT (FTF), Octopus Aim VCT (OOA) and Unicorn Aim VCT (UAV).