AIC poll reveals impact of VCT rule changes

AIC poll reveals impact of VCT rule changes

Changes in pensions relief have left VCT managers optimistic about investment opportunities, according to a poll.

A survey by the Association of Investment Companies (AIC) representing 73 per cent of the sector’s assets found that a fifth of VCT managers felt there are currently more opportunities for investment than last year.

The poll also explored the impact of changes to VCT rules.

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In last year’s Budgets rules relating to the amount invested, age of qualifying companies and use of investment funds were changed.

The maximum amount a venture capital trust-qualifying company can receive over its lifetime has been limited to £12m, or £20m for knowledge intensive companies.

In order to be eligible for VCT investment, companies will normally have to have made their first commercial sale in the past seven years, or ten years for ‘knowledge intensive’ companies.

Almost half of respondents said they currently find a similar number of investment opportunities to last year, before the rule changes; around a fifth said there were more opportunities than last year, although a third said there were fewer investment opportunities compared to last year.

Annabel Brodie-Smith, communications director of the Association of Investment Companies (AIC), said: “The VCT sector continues to play a hugely important role supporting SMEs, and it is encouraging that the sector continues to report good opportunities.

“The VCT sector is extremely diverse, and the impact of the rule changes will depend on individual companies and strategies.

“But the sector has always been adept in dealing with change and for the end user, the VCT benefits remain, both from a tax planning, income and diversity perspective.”

Adviser View

Robert Forbes, financial planner at Stadden Forbes Wealth Management, said: “This information does completely make sense as banks aren’t lending as much as businesses do need funding.”