Funds raised by venture capital trusts are down for the first time in years, according to data published today (16 October) by HM Revenue and Customs.
VCTs issued shares to the value of £435m in 2014 to 2015, and this was a slight fall of just over 1 per cent from the value of £440m in 2013 to 2014.
But HMRC said that the amount raised was the fifth highest since the introduction of VCTs in 1995, and the number of VCTs raising funds in 2014 to 2015 fell to 57 from 66 in 2013 to 2014.
It added the decrease in VCTs raising funds is likely to be due to some VCTs merging with others and some VCTs being wound up.
The number of VCTs managing funds decreased from 97 in 2013 to 2014 to 94 in 2014 to 2015.
HMRC added this was likely to be due to some VCTs merging with others and some VCTs being would up.
Additionally, it said since the introduction of VCTs in 1995 the vehicle has raised nearly £6bn of funds.
HMRC said that a rule change restricted enhanced share buy backs from April 2014.
Enhanced share buy backs allowed VCT investors to sell their current shares to VCTs (after the five year qualifying investment period has passed) and re-invest in the same VCT at the same time.
In a statement HMRC added that the amount of funds raised by VCT and the number of VCTs raising funds is closely linked and both have fluctuated over the years.
A change in tax relief rate in 2004 to 2005 from 20 per cent to 40 per cent saw the amount of funds raised increased from £70m in 2003 to 2004 to £520m in 2004 to 2005.
HMRC stated that although there has been a fall in the number of VCTs managing funds since 2010 to 2011, this is largely explained by VCTs merging to operate more efficiently and there has not been a corresponding drop in the amount raised by VCTs.
To learn more about VCTs, and earn CPD, read FTAdviser’s Guide to VCTs.
ruth.gillbe@ft.com
