The week to 7 Feb 2021 saw the highest inflow into VCTs of the tax year so far, with GBP33.5 million raised. For comparison, the equivalent week in 2020 saw GBP19 million raised. No individual week in 2020 was higher than last week.
Alex Davies, CEO of Wealth Club, says: “VCT demand has been buoyant, and has now outstripped the total amount raised at this point last year. With less than two months to the end of the tax year, unless there are any nasty surprises, VCT sales this year should beat last year overall.
“Demand has been driven by a few factors: Firstly, the investment case is much better than it ever was. Thanks to rule changes a few years ago, VCTs are now packed full of fast-growing tech-enabled businesses, the type that have seen their fortunes prosper rather than diminish as a result of the pandemic. Secondly, for wealthier investors there are now fewer ways to build up a decent retirement pot. Pensions are out of the window for many, investing in buy to let has become less tax efficient, and taxes on dividends are also higher. VCTs are an obvious next choice.
“Furthermore, many investors believe taxes will increase in the March Budget, so it makes a lot of sense to put as much as you can into legitimate tax efficient investments whilst you can.”
Wealth Club, the UK’s largest VCT broker, has seen consistent demand for VCTs this year, and sales are currently up 28.5% compared to this time last tax year.