Venture Capital Trusts statistics: 2022
Published 26 January 2023
© Crown copyright 2023
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected].
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/statistics/venture-capital-trusts-2022/venture-capital-trusts-statistics-2022
1. Main findings
Whilst the number of Venture Capital Trusts (VCTs) managing funds has decreased in the tax year 2021 to 2022, the amount of investment raised by the remaining VCTs has increased year on year.
The amounts claimed as tax relief grew in 2020 to 2021, reflecting the increase in funds raised by VCTs in that tax year. Amounts claimed as tax relief are reported with a one year time delay due to the nature of the Self Assessment reporting system (see ‘About these statistics’, below).
1.1 Headlines
- Venture Capital Trusts (VCTs) issued shares to the value of £1,122 million in 2021 to 2022, which is 68% higher in comparison to the 2020 to 2021 figure of £668 million.
- The number of VCTs raising funds has increased by 6 to 46 in the tax year 2021 to 2022.
- The number of VCTs managing funds has decreased by 5 to 52 in the tax year 2021 to 2022.
- In 2020 to 2021, Venture Capital Trust (VCT) investors claimed Income Tax (IT) relief on £640 million of investment. This is an increase of 10% from 2019 to 2020.
- The number of VCT investors who claimed Income Tax relief increased by 9% to 19,475 in 2020 to 2021.
2. Introduction
2.1 About these statistics
This is an annual National Statistics publication of Venture Capital Trusts (VCTs) statistics.
Section 3 (number of VCTs and funds raised) includes figures covering the period up to tax year 2021 to 2022. Section 4 (investors claiming relief on VCT investments) includes first estimates for 2020 to 2021. The deadline for submitting Self Assessment returns for the tax year 2021 to 2022 has not yet passed and individuals can also submit late claims, therefore the data for 2021 to 2022 is currently incomplete for publication. Information about the data sources and methodology can be found in the Background quality report.
In Table 1, figures for 2020 to 2021 are revised and 2021 to 2022 are provisional.
In Tables 2a and 2b, figures prior to 2020 to 2021 are revised and figures for 2020 to 2021 are provisional.
The next release of these statistics will be in early 2023. If you would like to comment on these statistics, please see the contacts named at the end.
2.2 What are Venture Capital Trusts?
The VCT scheme, introduced in 1995, is one of four tax-based venture capital schemes. VCTs raise funds for investments, normally annually, through new and/or top-up share issues to investors.
For more information about Venture Capital Trusts and the policy background, see the Venture Capital Trusts statistics: Introductory note.
3. Amount of funds raised and number of Venture Capital Trusts
Venture Capital Trusts (VCTs) have raised funds to the value of £1,122 million in 2021 to 2022, which is 68% higher than the 2020 to 2021 figure of £668 million.
Amounts raised have been rounded to the nearest £5 million for data up to 2016 to 2017 and £1 million for 2017 to 2018 onwards.
Table 1: Amount of funds raised and number of Venture Capital Trusts (VCTs) by year, 1995-96 to 2021-22
| Year | Funds raised (£ million) | VCTs raising funds | VCTs managing funds | Rate of IT relief (%) |
|---|---|---|---|---|
| 1995-96 | 160 | 12 | 12 | 20 |
| 1996-97 | 170 | 13 | 18 | 20 |
| 1997-98 | 190 | 16 | 26 | 20 |
| 1998-99 | 165 | 11 | 34 | 20 |
| 1999-00 | 270 | 20 | 43 | 20 |
| 2000-01 | 450 | 38 | 61 | 20 |
| 2001-02 | 155 | 45 | 70 | 20 |
| 2002-03 | 70 | 32 | 71 | 20 |
| 2003-04 | 70 | 31 | 71 | 20 |
| 2004-05 | 520 | 58 | 98 | 40 |
| 2005-06 | 780 | 82 | 108 | 40 |
| 2006-07 | 270 | 32 | 121 | 30 |
| 2007-08 | 230 | 54 | 131 | 30 |
| 2008-09 | 150 | 46 | 129 | 30 |
| 2009-10 | 340 | 68 | 122 | 30 |
| 2010-11 | 350 | 78 | 128 | 30 |
| 2011-12 | 325 | 76 | 124 | 30 |
| 2012-13 | 400 | 65 | 118 | 30 |
| 2013-14 | 440 | 66 | 97 | 30 |
| 2014-15 | 435 | 57 | 94 | 30 |
| 2015-16 | 445 | 45 | 80 | 30 |
| 2016-17 | 570 | 38 | 75 | 30 |
| 2017-18 | 705 | 43 | 68 | 30 |
| 2018-19 | 716 | 42 | 61 | 30 |
| 2019-20 | 645 | 43 | 61 | 30 |
| 2020-21 | 668 | 40 | 57 | 30 |
| 2021-22 | 1122 | 46 | 52 | 30 |
Figure 1: Amount of funds raised by VCTs (£ million), 1995-96 to 2021-22
As seen in Figure 1, the amount of funds raised by VCTs has been on a rising trend in recent years and has more than doubled since 2009 to 2010. Several rules which were introduced during the period, namely the restricted enhanced share buybacks from April 2014 and the government’s Patient Capital Review consultation in summer 2017, may partly explain the increased fund raising between tax year 2014 to 2015 and tax year 2017 to 2018, as VCTs anticipated possible changes to the rules of the scheme. The increase in the Income Tax relief rate to 40% saw a sharp increase in funds raised between 2004 and 2006 comapred to previous years.
As well as anticipation of changes from the Patient Capital Review, the increase in funds raised during tax year 2017 to 2018 and tax year 2018 to 2019 is likely due to the reduction of the lifetime allowance from £1.25 million to £1 million. This made traditional pensions less attractive, and the introduction of pension freedoms, which allow for cash to be taken out of the pot for investment, rather than buying an annuity, mean there is more freedom for investment in alternatives such as VCTs.
The slight decrease in funds raised in 2019 to 2020 is likely to be a reaction to the VCT reforms introduced in 2017, but which came into effect during later accounting periods, and potentially due to the impacts of Covid-19 towards the end of the tax year. However, funds raised in 2020 to 2021 increased slightly despite covering the main pandemic period. Funds raised in tax year 2021 to 2022 have increased substantially, in line with the rise in funds raised in the years up to 2018 to 2019. This may be, in part, the result of recovery from the Covid-19 pandemic. Additionally, the VCT market broadly follows the wider venture capital market and 2021 was a record breaking year for the venture capital industry in terms of fundraising.
Figure 2: Number of VCTs raising and managing funds, 1995-96 to 2021-22
The number of Venture Capital Trusts (VCTs) raising funds in 2021 to 2022 has increased to 46 from the previous year. In the past, the amount of funds raised by VCTs and the number of VCTs raising funds have been closely linked. However, this has been less evident in recent years where similar amounts of funds have been raised by a smaller number of larger VCTs. This trend has continued in 2021 to 2022, with a large increase in funds raised but a modest increase in the number of VCTs raising funds.
There has been a significant increase in the amount raised by VCTs in 2021 to 2022, though only a small number more raised funds, reflecting further concentration of the VCT market. As shown in Figure 2, Venture Capital Trusts (VCTs) have been merging over time to achieve economies of scale.
VCTs managing funds include VCTs which raised funds in the tax year and also those VCTs which managed funds raised in previous years. The number of VCTs managing funds has decreased in 2021 to 2022 as a few VCTs have ceased to be active. Since 2010 to 2011, the number of VCTs managing funds has generally been decreasing, dropping to 52 in 2021 to 2022.
4. Investors claiming Income Tax relief and amounts invested
The amount of VCT investment on which Income Tax relief was claimed increased by 10% in 2020 to 2021, compared to the previous year. The number of investors increased by 9% to 19,475 in 2020 to 2021. This information only covers claims made through Self Assessment and will not cover investors making Income Tax relief claims through other systems (for example PAYE) or not making any claims.
Tables 2a and Table 2b present the distribution of investors claiming Income Tax relief under the VCT scheme, and the amounts invested, respectively.
Total figures provided in Tables 2a and 2b on the amount of investment on which Income Tax relief was claimed are not directly comparable with the figures on the amount of investment received by VCTs in a tax year shown in Table 1, as some relief could be claimed outside Self Assessment, or not claimed at all.
4.1 Number of investors claiming VCT relief
Most investors tend to invest under £50,000 into VCT funds. The average amount invested by an individual in 2020 to 2021 was around £33,000.
Numbers have been rounded to the nearest 5. Totals may not sum due to rounding.
Table 2a: Number of investors claiming VCT relief by size of investment, 2018-19 to 2020-21
| Investment band | 2018-19 | 2019-20 | 2020-21 |
|---|---|---|---|
| Up to £1,000 | 1,440 | 1,610 | 1,800 |
| £1,000 to £2,500 | 1,010 | 1,255 | 1,160 |
| £2,500 to £5,000 | 1,965 | 1,785 | 1,980 |
| £5,000 to £10,000 | 3,600 | 3,135 | 3,405 |
| £10,000 to £15,000 | 1,815 | 1,480 | 1,675 |
| £15,000 to £20,000 | 1,875 | 1,650 | 1,770 |
| £20,000 to £25,000 | 1,265 | 1,075 | 1,190 |
| £25,000 to £50,000 | 3,410 | 2,870 | 3,145 |
| £50,000 to £75,000 | 1,045 | 880 | 1,005 |
| £75,000 to £100,000 | 955 | 795 | 900 |
| £100,000 to £150,000 | 535 | 435 | 505 |
| £150,000 to £200,000 | 1,035 | 895 | 945 |
| Total | 19,945 | 17,870 | 19,475 |
Figure 3: Distribution of the proportion of investors claiming VCT relief by size of investment, 2019-20 to 2020-21
In 2020 to 2021, there was a significant increase in the number of VCT investors compared to the previous year, consistent with the increase in funds raised by VCTs in 2020 to 2021 (see Table 1). This is likely due to the sector readjusting to the VCT investment conditions which were introduced in 2017 but began to take effect in later accounting periods. It was thought that the Covid-19 pandemic may have acted to reduce investment towards the end of 2019 to 2020 as uncertainty increased across the economy. However, the increase in investment in 2020 to 2021 suggests Covid impacts may have been lower than expected, or they tempered what would have been a greater increase than is seen in the data in 2020 to 2021.
Figure 3 shows the distribution of investors claiming VCT relief grouped by size of investment. Around 83% of VCT investors claimed tax relief under the VCT scheme for an investment of £50,000 or less; the largest number being in the £5,000 to £10,000 group with 17% of the total and the £25,000 to £50,000 group with 16% of the total. In 2020 to 2021 the proportion of VCT investors in the higher investment size categories (above £25,000) is similar to 2019 to 2020.
Figure 4: Number of investors claiming VCT relief via Self Assessment, 2004-05 to 2020-21
Figure 4 shows a time series of the number of investors who have claimed VCT relief from 2004 to 2005 to 2020 to 2021. The tax year 2018 to 2019 saw the largest number of investors since 2005 to 2006. This reflects the increase in funds raised seen in Figure 1 as a result of pension changes and the Patient Capital Review.
4.2 Amounts invested by VCT investors
Similar to the number of investors, Table 2b shows a significant increase of 10% in the amount of relief claimed by VCT investors in 2020 to 2021.
Amounts have been rounded to the nearest £5 million. Totals may not sum due to rounding.
Table 2b: Amount of investment on which VCT relief was claimed by size of investment, 2018-19 to 2020-21
| Investment band | 2018-19 | 2019-20 | 2020-21 |
|---|---|---|---|
| Up to £1,000 | <5 | <5 | <5 |
| £1,000 to £2,500 | <5 | <5 | <5 |
| £2,500 to £5,000 | 10 | 5 | 10 |
| £5,000 to £10,000 | 30 | 25 | 30 |
| £10,000 to £15,000 | 25 | 20 | 20 |
| £15,000 to £20,000 | 35 | 30 | 35 |
| £20,000 to £25,000 | 30 | 25 | 30 |
| £25,000 to £50,000 | 130 | 110 | 120 |
| £50,000 to £75,000 | 65 | 55 | 60 |
| £75,000 to £100,000 | 90 | 75 | 85 |
| £100,000 to £150,000 | 65 | 55 | 65 |
| £150,000 to £200,000 | 200 | 175 | 185 |
| Total | 685 | 580 | 640 |
Figure 5: Distribution of the proportion of investment for which VCT relief was claimed by size of investment, 2019-20 to 2020-21
In Figure 5, we see that the largest category of investment by amount in 2020 to 2021 was investments between £150,000 to £200,000. More precisely, 29% of the total amount invested is accounted for by only 5% of investors.
Figure 6: Comparison of the amount of investment on which relief was claimed via Self Assessment and total funds raised (£ million), 2004-05 to 2020-21
Figure 6 shows that the amount of relief claimed and total funds raised by VCTs are largely consistent year on year. In 2020 to 2021, around 96% of the total VCT investments were claimed through Self Assessment. The remaining amounts are assumed to be either claimed outside Self Assessment or not claimed at all.
5. Contact
Statistical contacts: M Hindley and M Rowe-Brown; [email protected]
Queries relating to investing in VCTs: Venture Capital Reliefs Team; [email protected]