In 2018/19, the venture capital trust (VCT) sector raised £731 million for small businesses: the highest amount ever raised at the current 30% level of upfront tax relief and the second highest amount since VCTs were created in 1995.
And yet, for many investors and financial advisers alike, the rules around investing in VCTs can remain opaque at best and downright confusing at worst.
That is why we at Intelligent Partnership have published our first Adviser’s Guide to Venture Capital Trusts. Designed to give advisers a clear understanding of the nuts and bolts of VCTs, the guide runs through the risks and rewards of investing in VCTs, as well as giving an overview of the practicalities that advisers need to keep in mind when considering a VCT investment on behalf of a client.
But we know that advisers want more than just the bare bones of how an investment works. So alongside the key rules and regulations that need to be followed, the guide provides an update on the latest legislative changes, case studies offering practical examples of how VCTs can operate in true-to-life scenarios, plus expert commentary from the likes of the Association of Investment Companies (AIC) and accountancy firm BDO.
VCTs are evolving, too. Since new rules were announced in the Autumn Budget 2017, and brought into force in April 2018, investments cannot be about capital preservation. Instead, every pound invested now needs to be at risk.
While this might put some investors and advisers off, the truth is that there are significant opportunities for success within the VCT market, so understanding this sector is now perhaps more important than ever. For the right client, VCTs should always be an option on the menu, even if in the end the client and/or adviser decides they do not have the appetite for it on a particular occasion.
As the future of investment in a post-Brexit world remains far from clear, it’s good to know that VCTs open investors to a world beyond the UK. While VCTs have helped a wide range of British businesses – with £8 billion invested into VCTs since their creation in 1995 – the growth companies that attract investment are usually “global in their approach”, as Ian Sayers, chief executive at the AIC, explains in his opening statement. “Opportunities are opening up in the US, Middle East and Asia.”
And if you want to meet some of the top managers in this market, why not book yourself onto one of our upcoming VCT Showcase events in January? These free to attend events will see up to eight managers discussing their offers, as well as giving their views on the market more generally. To find out more and book your place, click here