Yesterday, HMRC released both the 2024-25 EIS and SEIS figures and the Venture Capital Trust (VCT) figures. The latter of which rose modestly in the previous tax year.
With VCT investments rising to £881 million in 2024-25 from £872 million in the previous tax year, industry experts have shared their thoughts with us on the latest figures.
MQ Wei, lead tax advantaged analyst at St. James’s Place, said:
“The latest HMRC statistics for VCTs and EIS suggest a market that is stabilising after a period of adjustment. A clear trend is emerging across both schemes, with fewer investors deploying larger amounts of capital, pointing to a more concentrated investor base. This likely reflects a combination of reduced disposable income, ongoing macroeconomic uncertainty and a more complex regulatory environment.
“However, these figures need to be viewed against the backdrop of the significant policy reset announced in the Autumn Budget 2025, which represents one of the largest shifts in the sector in over a decade. The expansion of investment limits broadens the opportunity set for managers, while the reduction in upfront VCT income tax relief creates a clearer distinction between the two schemes and may reshape relative demand.
“As the latest data captures behaviour prior to these reforms, it provides a useful baseline for what comes next. We expect increased competition and an earlier start to the VCT fundraising cycle this year, while over time the direction of travel is likely to be towards further consolidation, with larger managers gaining share. Despite this, demand for tax‑efficient investing remains structurally resilient, with both schemes continuing to play an important role for investors.”
Adrian Murphy, CEO of Murphy Wealth, said:
“The VCT statistics cover the 2024-2025 tax year – before the Chancellor announced the cut to the income tax relief they provide. It’s likely that in the next set of figures we will see many more people taking advantage of the 30% income tax relief they offer on up to £200,000 per year, before the cut to 20% came into effect in April.
“VCTs are a tax-efficient alternative to pensions for individuals who have maxed out their £60,000 annual allowance, or their level of income means that they are tapered to £10,000 of contributions each year. They also have their role to play for business owners looking to extract profits, offering tax-free dividends and no capital gains tax on disposals. Used in the right way, they can be powerful, long-term financial planning tools.
“However, it’s worth bearing in mind VCTs are high-risk, sophisticated investment products that should only be used by those who can afford to lose the money. We would only recommend investing in them in very specific circumstances and taking financial advice before opting to do so.”
Mark O’Donnell, Insight Manager at MICAP from Defaqto, said:
“The VCT data for 2024/25 tax year shows a similar tale to the SEIS/EIS data. Claimed income tax relief is at a comparable level to 2023/24 tax year; however, this represents a decline from the two preceding years. For VCTs the 2023/24 and 2024/25 tax years represent the fourth and third best years of fundraising respectively. In contrast, for SEIS/EIS every year since 2013/14 has recorded higher fundraising than the last two years of published data.
“There has also been a similar decline in investors across the schemes over the last year. This suggests that greater awareness is needed regarding the benefits these schemes can bring to investors.
“It will be important to monitor the impact of the government’s increase in funding limits to investee companies from April 2026, as well as the effect of the reduction of upfront income tax relief for VCTs. To date MICAP’s panel clients continue to show interest in VCTs for the current tax-year. While not directly comparable MICAP data on VCT fundraising for the VCTs opening new fundraises in 2025/26 showed a modest increase in fundraising, though not the levels seen in 2021/22 and 2022/23 despite the change income tax relief from April 2026.”
Nick Morgan, Partner at Foresight Group, said:
“The continued appetite for VCT, EIS and SEIS investment reflected in the latest HMRC figures highlights the enduring importance of these schemes to the UK’s entrepreneurial ecosystem. However, the recent reduction in income tax relief available on VCTs is likely to have a diminishing effect on fundraising in the year ahead, as investors reassess the relative attractiveness of the structure.
“That said, the underlying demand for growth capital remains strong. For growing businesses, particularly outside London, access to supportive, long-term capital can be transformative in helping management teams scale sustainably and navigate challenging market conditions. Foresight’s extensive regional office network gives us local insight and reach across the UK, creating a large deal origination network which allows investment opportunities across the whole geography to be identified, which may otherwise be overlooked.
“With four VCTs investing in SMEs nationwide, Foresight continues to back businesses creating skilled jobs and driving regional growth. In an environment where capital can still be hard to access, the role these schemes play in supporting UK SMEs remains vitally important for both investors and the broader economy.”
Melissa Griffiths, Head of Sales at GrowthInvest, looks ahead to the remainder of this tax year, saying:
“The UK VCT industry now manages approximately £6.5 billion in assets under management, with the 2025/26 tax year delivering another strong fundraising season. According to figures from the AIC, around £918 million was raised — the third-highest annual total on record and approximately 3% higher than 2024/25.
“This latest surge in fundraising was accelerated by investors bringing forward subscriptions ahead of the UK Government’s decision to reduce upfront VCT income tax relief from 30% to 20%, effective from 6 April 2026. VCTs continue to play an increasingly important role within tax-efficient investment strategies, particularly against a backdrop of tighter pension allowances and a persistently high-tax environment. With the combination of tax-free dividends, upfront income tax relief and tax-free capital gains, VCTs remain a valuable financial planning tool for clients seeking to mitigate tax exposure while supporting the UK venture capital ecosystem.
“On a recent episode of the GrowthInvest podcast, Alternative Thinking, we spoke with Nick Britton from the AIC, about the upcoming fundraising season and the potential implications of the reduced income tax relief on investor demand. The AIC is actively lobbying the Government to reinstate the 30% rate, with many expecting fundraising levels to soften as a consequence of the lower relief.
“The sector also faces an additional dynamic this year: the five-year holding period is maturing for the record £1.1 billion VCT fundraising cohort from 2021/22. As investors become eligible to sell, this is expected to lead to increased secondary market activity and greater pressure on VCT share buyback mechanisms.
“At the same time, forthcoming inheritance tax changes affecting pensions from April 2027 are drawing renewed attention to tax-efficient investment solutions. While VCTs do not directly address inheritance tax liabilities, they remain a highly effective component of broader financial planning strategies designed to navigate the evolving tax landscape.”
