There are more groups looking to the sector attracted by its tax efficient format, but also a squeezed supply side as the demand for cash has fallen with popular picks in the past, Baronsmead and Mobeus, among the schemes not raising any new money this year, while others are seeking more modest sums, Hollands said.
The limited supply can be traced back to the November 2015 implementation of the Finance Act which aimed to make UK venture capital schemes compliant with EU directives, changes that are now trickling down and restricting supply.
Hollands has labelled this tax year as a “transitional” one for the VCT industry, but doesn’t doubt that some investors will still benefit from it and names Hargreave Hale AIM VCTs, Albion VCT and the Triple Point Income E-share as high quality picks that are still available.
He said: “The right investor who understands the risks involved will benefit from the tax reliefs and for those who already have a portfolio of mainstream investments, VCTs and potentially EIS can be a valuable part of their armoury. But this year, more than any other in recent memory, it may be wise to act sooner rather than later in selecting new VCT investments.”
