Published: Jan 14, 2022
Investor demand for venture capital trusts (VCTs) shows little sign of letting up. Fundraising levels for the 2021-2022 tax year in late December suggested that inflows will exceed those in 2020-2021 which was also a bumper year. VCTs' tax breaks, which include 30 per cent upfront income tax relief if you hold a VCT's shares for at least five years and tax-free dividends, have been buttressed by the growth of technology businesses in the UK.
This is a key point in favour of the VCT market, according to Bill Nixon, managing partner and head of the investment team at Maven Capital Partners. “The UK has become a world-class technology economy with some great companies emerging,” he adds.
Nixon thinks that this makes VCTs, which gravitate towards tech-facilitated businesses, more attractive. And reductions in the lifetime and annual pension allowances mean that VCTs and Enterprise Investment Schemes (EIS) are “one of the last few mediums available for investors to get a tax shelter on their investments,” he says.
Maven Capital Partners, which was acquired by wealth manager Mattioli Woods in July 2021, runs four VCTs with a combined net asset value (NAV) of about £270m. The VCTs co-invest in many of the same assets. Two of them hold nearly 120 investments and the other two have just under 100, and this scale helps with diversification and risk management.
This piece first appeared in Investors Chronicle on 6 January 2022