As adviser interest in Venture Capital Trusts (VCTs) gathers pace once again, the conversation is shifting beyond tax relief toward innovation, regional growth and the long-term health of the UK’s early-stage ecosystem. In this exclusive interview, VCTA Chair Chris Lewis explains what is driving renewed momentum, where VCT capital is being deployed, and why 2026 could prove a pivotal year for the sector.
Chris reveals what is driving increased adviser interest in VCTs, including the sectors where VCTs are backing. As well as sharing his feelings on the current health of the early-stage system, along with the trends and misconceptions surrounding VCTs in 2026.
TEI: We’ve seen adviser interest in VCTs pick up again. What do you think is driving that?
CL: Advisers are most likely responding to the enduring appeal of tax-efficient investing in a volatile market, combined with the strong track record VCTs have demonstrated in backing high-growth businesses. The returns achieved by VCTs have ensured that their popularity has been increasing for many years.
The recent news that there will be a reduction in the initial tax relief available to VCT investors was unexpected and disappointing. Nonetheless, VCTs continue to be a great way to access a portfolio of high-growth investments, supported by tax-free dividends and exemption from capital gains tax.
VCTs will remain a key part of the UK’s tax-efficient investment opportunities alongside pensions, ISAs, and EIS. The reduction in initial relief from April 2026 will likely encourage advisers and investors to consider an investment in VCTs as part of the current offers available.
TEI: What kinds of businesses are VCTs backing at the moment, and what does that say about the direction of the market?
CL: If you look at current VCT portfolios, you’ll see that they offer access to innovative technologies that are underpinning the growth of the venture capital market, such as AI, data analytics, and fintech.
But it’s not just tech; consumer brands with purpose-driven models and creative ventures are also attracting capital. That mix tells you the market is leaning into innovation and sustainability, with an eye on scalable businesses that can thrive , not just in the UK, but globally. VCTs are a £6 billion plus sector, having invested in over 1,000 companies which have created over 100,000 jobs.
TEI: From what you’re seeing, how confident do you feel about the overall health of the early-stage system right now?
CL: VCT-backed businesses continue to scale, with many continuing to cite funding gaps beyond early rounds, reinforcing the need for investment limit reforms, which we were pleased to see implemented in this Budget.
TEI: What trends across VCT portfolios should advisers be paying close attention to this year?
CL: Regional diversification is a big one as there’s a clear push to seek out and to back businesses outside London, ensuring that VCTs support the growth agenda throughout the UK’s nations and regions. Sectorally, AI, fintech, and healthtech are commanding attention. Investors and their advisors will be looking into the sectors and technologies within existing VCT portfolios, and the trends and themes that VCT managers expect to tap into going forward.
TEI: What’s the biggest misconception you still hear about VCTs, and how would you clear it up?
CL: The idea that VCTs are only about tax relief; crucially, they are about backing UK innovation and job creation while delivering attractive returns that are also tax advantaged.
VCTs should be seen as long-term investments as part of a wider investment portfolio, and not simply for the tax year-end.
Conclusion
As the tax and economic landscape continues to evolve, VCTs remain a distinctive part of the UK’s tax-efficient investment toolkit. While changes to upfront relief may reshape behaviour at the margins, Lewis is clear that the fundamental purpose of VCTs has not changed. They continue to play a vital role in funding innovation, supporting regional growth and backing businesses with global ambitions.
For advisers, the message is one of perspective. VCTs are not simply a year-end solution, but a long-term allocation that can sit alongside pensions, ISAs and EIS within a diversified portfolio. As 2026 approaches, understanding the themes, sectors and structural strengths within VCT portfolios will be key to helping clients access growth while supporting the next generation of UK businesses.
This piece featured in this year’s annual issue of Tax-Efficient Investment (TEI) Insights, which you can read here!
About Chris Lewis
Chris is the chair of the VCTA, having succeeded Will Fraser-Allen in the role as of January 2024. Chris brings over 25 years of wider industry experience to the Chair role. He is currently Chief Financial and Operating Officer at Pembroke VCT, which manages more than £200m in VCT assets, spanning a diverse portfolio of over 40 growth-stage companies.
Prior to joining Pembroke in 2019, Chris was the Chief Financial Officer at Downing LLP, which was an active investor in growing businesses through its VCT and EIS products. He has also worked in professional services, with KPMG & EY, and with a Family Office.
