On 20 October 2016 HMRC released statistics on Venture Capital Trusts.

The tax regime for venture capital trusts (VCTs) provides that a VCT if correctly structured can obtain tax relief for the trust itself and for its investors. The VCT regime is one of the schemes that encourage investment in small and start-up companies by giving tax relief to individuals based on a percentage of the amount invested.

Income tax relief of 30% is available for shares that are subscribed for in a venture capital trust, deductible from the total income tax payable by the individual investor. The VCT shares must be held by the taxpayer for a minimum qualifying period of five years. Dividends on VCT shares acquired, whether by subscription or otherwise, are also exempt from tax, provided that the shares are held for at least five years.

In 2015/16 VCTs issued shares worth GBP 435 million, a similar amount to that raised in 2014/15. The number of VCTs raising funds fell however from 57 in 2014/15 to 43 in 2016/16. The recent reductions in funds raised could be partly due to a rule change from April 2014 restricting enhanced share buy backs. These had previously allowed VST investors to sell their current shares to the VCT after they reached the five-year qualifying investment period and then re-invest in shares of the same VCT. After the rule change levels of investment may have been impacted.

The total number of VCTs managing funds also reduced from 94 VCTs in 2014/15 to 80 VCTs in 2015/16. HMRC suggests that this decrease in the total number of VCTs is a consequence of mergers of VCTs with some being wound up.

VCTs have raised almost GBP 6.4 billion of funds since the VCT regime began in 1995.