Venture capital trusts have moved on from being saved for one-offs to an “integral part” of the advice process, with clients increasingly making investments outside the traditional January to March window.
The publicly listed, closed-end funds have seen increased demand, meaning advisers often invest clients’ money earlier in the tax year.
Data from investment service Wealth Club shows that in 2018-19, 38 per cent of the final amount raised was committed by the end of the calendar year. This rose to more than half in 2022-23.
The firm put this down to the speed that some popular offers filled up.
Jack Rose, head of sales at investment manager Triple Point, said clients now see making VCT investments as part of regular financial planning.
Investors in VCTs can receive up to 30 per cent income tax relief, along with tax-free dividends.
Rose said: “Over the past five years, advisers across the UK have adopted a more evergreen approach to VCTs.
“Given the wide range of planning scenarios, the up-front income tax relief that VCTs offer can help investors offset both earned and unearned income.
“This has helped support the growing trend for VCT fundraising to extend beyond the traditional 3-month window of January to March.
“Another contributing factor to this trend is the increased demand for certain offers which sees advisers investing client’s money earlier in the tax season.”
Overall, the VCT market has seen increased popularity in recent years and Rose said advisers can now tailor their strategies based on client needs which aren’t strictly tied investing in VCTs in January to March.
He added: “For advisers, the shift towards VCTs becoming more evergreen makes it much easier to integrate tax-efficient investments into the advice process, allowing many to avoid the end of tax year rush.”
tara.o'connor@ft.com
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