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

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

 

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