Venture capital trusts (VCTs) have been reaching capacity as the end of the tax year approaches, with Northern VCTs closing their £36m fundraise this week.
The decision by a few large VCTs not to raise money this tax year, and smaller offers from some other players, means capacity is six per cent lower than last year.
Of the £848m of VCT capacity currently available this tax year, which ends on 5 April, there is £206m remaining, according to data from Wealth Club.
“As seen in previous tax year ends, we expect to see a flurry of VCT offers follow suit and close in the next few weeks,” said Nicholas Hyett, investment manager at Wealth Club.
“Once a VCT has filled, that’s it for the year, and by the time the last few days of the tax year come round we usually see a much reduced selection of offers available,” he added.
Interest in VCTs spiked after the Budget when Chancellor Rachel Reeves hiked capital gains tax, as profit from the vehicles are exempt from capital gains tax and investors can claim 30 per cent income tax relief on the investments.
With Northern VCTs already at capacity, other VCTs are also almost at their brink, such as the 5.3 per cent of capacity remaining in Octopus’ AIM and Apollo VCTs.
“AIM has been through a torrid time and the Octopus AIM VCTs have not escaped unscathed, with a total return of -41.3 per cent over three years,” noted Hyett.
Meanwhile, the Apollo VCT invests in specialist business-to-business (B2B) software, backing businesses that are slightly more mature, typically already reporting £2m-£8m of sales a year.
Others, such as Molten Ventures VCT, have just 13.4 per cent capacity remaining, while the three Albion VCTs have 18 per cent remaining.
VCTCapacity remainingAlbion VCTs18 per centBaronsmead VCTs39.8 per centMaven VCTs24 per centMolten Ventures VCT13.4 per centOctopus AIM VCTs5.3 per centOctopus Apollo VCT5.3 per centPembroke VCT35.7 per centUnicorn AIM VCT20 per centSource: Wealth Club