Venture Capital Trusts (VCTs) are a “net benefit to the economy”, Triple Point retail strategy director Diana French told Money Marketing.
French added this is why the VCT and Enterprise Investment Scheme (EIS) sunset clause was extended to 2035 during the Autumn Statement on 22 November 2023.
VCTs help “Britain’s economy and helps to boost smaller companies”, French said.
The end of November last year marked the 30th anniversary of the launch of VCTs. In that time, they have raised £12.5bn to invest in thousands of smaller companies, according to the Association of Investment Companies (AIC).
VCTs were introduced in 1995 and are investment vehicles that were set up to promote investment in small UK businesses that meet certain criteria.
To encourage support for these businesses, the government offers generous tax benefits.
French noted that numerous successful companies have started in VCTs such as Zoopla, Secret Escapes and Virgin Wines.
In regards to financial advisers, French added that VCTs are now a “key part of an adviser’s toolkit”.
French said she “loves VCTs” and that she knows some advisers who echo her opinion and have 20–30 clients who are invested in VCTs.
She added that VCTs are becoming more “mainstream” but only for the “right client”.
VCTs are part of a diversified portfolio and are not a “substitute for pensions but can compliment them”, French added.
Certain advisers are now doing VCT planning as well as pension planning, based on conversations she has had.
Additionally, following chancellor Rachel Reeves’ first Budget, there is an increasing amount of conversations around the topic ‘where can I get tax relief’ following the hikes to various taxes.
The generous tax benefits VCTs offer are making them more popular.
The Triple Point Venture VCT portfolio comprises of 50 companies of various sizes and stages of maturity, operating across 20 different sectors.
The VCT portfolio companies have collectively created 2,200 new jobs as of June 2024.
The VCT typically invests in companies either at the pre-seed or seed stage, when they are generating up to £1m of annual revenue and need funding to build teams and scale their operations.
Triple Point is a purpose-led investment-management house that supports financial advisers but does not actually provide advice to investors itself.
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