Now that we’re more than halfway through 2026, and around 3 months into the new tax year, Daniela Sesztak, Investment Analyst at MICAP (part of Defaqto), shares her insights on how VCT fundraising is looking so far in 2026/27.
The start of a new tax year is usually a useful point to assess the Venture Capital Trust (VCT) market. It provides an early indication of investor sentiment, whether fundraising momentum has carried through from the previous cycle and how next season’s fundraising may be positioned.
This year, however, follows a policy change announced in the Autumn Budget 2025, which reduced the upfront income tax relief from 30% to 20% with effect from 06 April 2026. An important consideration for the market is the extent to which this change influences investor behaviour and fundraising activity going forward.
Based on post-tax-year end inflows, as provided to MICAP by VCT managers, there is a mixed picture for VCT offers (including joint offers) that remained open beyond 05 April 2026. Between 06 April 2026 and 29 June 2026, open VCT offers raised a further £51.1m. This compares with £42.9m raised over the same period in 2025. However, it should be noted that fundraising in the 2026/27 season has been concentrated in a small number of offers. For instance, Gresham House Income & Growth VCTs and Octopus Apollo VCT together accounted for £37.7m, or approximately 74% of the £51.1m raised between 06 April and 29 June 2026.
Despite post-tax-year end fundraising exceeding the equivalent period last year, adviser sentiment remains cautious. A survey conducted by RAM Capital in May and June 2026 showed 97% of advisers expecting VCT demand to fall in 2026/27 and 55% expecting a significant decline. A portion of demand appears to have been pulled forward into the 2025/26 tax year, as some investors took action ahead of the income tax relief reduction.
Many of the larger, established VCTs were already fully subscribed or close to capacity by early April 2026 and have seen little to no additional capital since. Albion VCTs, British Smaller Companies VCTs, Foresight Enterprise VCT, Foresight VCT and Northern VCTs all saw no change after the tax year end, having already reached their fundraising limits. These offers accounted for roughly 27% of the overall target raise (including overallotment) of £1.23bn across the VCT market as a whole but represented around 42% of the total funds raised by the end of the 2025/26 tax year.
Where there has been continued fundraising in 2026/27, the largest increases have been recorded by a handful of VCTs. Gresham House Income & Growth VCTs (formerly Mobeus VCTs) raised a further £25.8m after the 2025/26 tax year end, the largest increase during the period. Octopus Apollo VCT added £11.9m, followed by ProVen VCTs at £3.3m, Maven Income & Growth VCTs at £2.6m, Puma VCT 13 at £1.4m, and Pembroke VCT at £1.2m. However, inflows appear to be more concentrated than during the equivalent period last year, where a broader range of open VCT offers continued to attract post-tax-year subscriptions. In total, 13 open VCT offers raised less than £1m each between 06 April and 29 June 2026.
Manager feedback since the start of the 2026/27 tax year has been mixed. Some managers have reported lower levels of investor interest, which they attribute to the reduction in the upfront income tax relief level in addition to the fact that many investors had already committed capital earlier than usual. For example, Lenny Norstrand, Partner at RAM Capital, noted that Baronsmead VCTs experienced a significant drop in demand after April compared with the same period last year. Others suggest that adviser engagement has remained stable, albeit with investors taking longer to make decisions and being more selective and cautious in how they allocate capital.
As we assess the prospects for this market, it is worth remembering that there is precedent for this type of policy change. The reduction in income tax relief from 40% to 30% in 2006/07 was followed by a drop in fundraising levels of approximately 65%, which took over a decade to recover. However, the VCT market is now significantly larger and more developed than it was two decades ago, with a broader adviser base, larger managers, more established distribution channels and much more in-depth analysis available from companies such as MICAP.
Harry Robson, Managing Sales Director at LightTower Partners (promoter of Unicorn AIM VCT), noted “the appetite for risk has reduced given the broader economic backdrop”, while “positive performance is still very strongly rewarded by investors”. He also noted that “VCTs that have delivered strong performance and exits continue to attract the majority of capital”.
That said, VCTs offer additional benefits beyond upfront income tax relief, including tax-free dividends, CGT-free growth and access to a diversified portfolio of smaller growth companies. This may be particularly relevant for investors who have already maxed out their ISA allowance and do not want to overfund their pension pots. For many clients, VCTs are not used in isolation but form part of a broader investment strategy rather than being driven purely by income tax relief.
At this stage, it remains early in the tax year to reach any firm conclusions about the longer-term impact of the reduction in upfront income tax relief. What will be more telling is whether inflows continue to build over the coming months and how VCT managers will position their next fundraises under the revised tax framework in the new VCT season that typically starts around September 2026.
For now, the data presents a mixed picture. While post-tax-year fundraising has exceeded the equivalent period last year, adviser sentiment remains cautious and capital has been concentrated in a relatively small number of established offers.
“The priority right now is making sure we are being proactive, maintaining that five-star service and covering all our bases to ensure clients are properly supported.”
By Daniela Sesztak, Investment Analyst at MICAP, part of Defaqto
