Venture capital trusts raised £918 million in the 2025/26 tax year, making it the third highest annual fundraising on record, according to figures from the Association of Investment Companies.
The figure was 3% higher than the £895 million raised during the previous tax year.
Money raised in the 2025/26 tax year was eligible for upfront income tax relief at 30%, while money raised in the current tax year will attract relief at 20%.
Richard Stone, chief executive of the Association of Investment Companies, said: “A strong year of fundraising by VCTs is good news for young, ambitious UK companies with growth potential. This is money VCTs can use to help their current investee companies scale up, as well as identifying exciting new opportunities they can help to get off the ground.”
However, Stone warned that fundraising this year is likely to look different, following the cut to income tax relief.
“The cut in income tax relief from 30% to 20% shifts the risk/reward calculation for investors and ultimately that will mean growth capital drying up for some of the UK’s most promising companies. We will be monitoring the situation and will continue to urge the Government to reconsider its decision.”
Chris Lewis, chair of the VCT Association, commented: “VCTs often provide the first institutional investment to support the founders of the country’s high-potential SMEs. With a continued scale-up funding gap in the UK, VCTs play a key role in driving the success of these ambitious companies.
“Wile this year’s total market raise of £918m is marginally ahead of last year, the recent reduction in the initial tax relief from 30% to 20% means it is unclear how much of next year’s fundraising has simply been brought forward.
“We encourage the UK Government to reconsider its decision and to adopt a range of other enhancements to ensure the continued strength and growth of VCTs for UK founders and retail investors.”
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