Venture Capital Trusts statistics: 2023
Published 24 January 2024
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1. Note on this publication
To improve the quality of this publication, HMRC has taken the decision to delay a part of the publication of statistics on the amount of funds raised by Venture Capital Trusts (VCTs), the number of VCTs raising and managing funds. This is to take advantage of utilizing HMRC administrative data in the production of these statistics. It is expected that publication will take place in May 2024 and publication will include the above mentioned statistics along with the statistics that have been included in this publication.
2. Main findings
The amount of investment Income Tax relief is claimed on grew in 2021 to 2022, 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).
2.1 Headlines
- in 2021 to 2022, Venture Capital Trust (VCT) investors claimed Income Tax (IT) relief on £1,040 million of investment. This is an increase of 61% from 2020 to 2021. This is in line with the 68% increase in the amount of funds raised by VCTs in 2021 to 2022 compared with the previous year
- the number of VCT investors who claimed Income Tax relief increased by 32% to 25,800 in 2021 to 2022
3. Introduction
3.1 About these statistics
This is an annual National Statistics publication of Venture Capital Trusts (VCTs) statistics.
Section 5 (investors claiming relief on VCT investments) includes first estimates for 2021 to 2022. The deadline for submitting Self Assessment returns for the tax year 2022 to 2023 has not yet passed and individuals can also submit late claims, therefore the data for 2022 to 2023 is currently incomplete for publication. Information about the data sources and methodology can be found in the Background quality report.
In Tables 1a and 1b, figures prior to 2021 to 2022 are revised and figures for 2021 to 2022 are provisional.
The next release of these statistics is expected to be in May 2024. If you would like to comment on these statistics, please see the contacts named at the end.
3.2 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.
4. Amount of funds raised and number of Venture Capital Trusts
The statistics usually contained in this section will not be included in this publication. HMRC have taken the decision to delay publication of a part of these statistics until May 2024 in order to improve the quality of the underlying data. For statistics for tax year 2021 to 2022, see last years publication Venture Capital Trusts statistics: 2022.
5. Investors claiming Income Tax relief and amounts invested
The amount of VCT investment on which Income Tax relief was claimed increased by 61% in 2021 to 2022, compared to the previous year. The number of investors increased by 32% to 25,800 in 2021 to 2022. 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.
Table 1a and Table 1b present the distribution of investors claiming Income Tax relief under the VCT scheme, and the amounts invested, respectively.
Total figures provided in Tables 1a and 1b 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 historical publications, as some relief could be claimed outside Self Assessment, or not claimed at all.
5.1 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 2021 to 2022 was around £40,000. The annual limit on investment which relief can be claimed on is £200,000.
Numbers have been rounded to the nearest 5. Totals may not sum due to rounding.
Table 1a: Number of investors claiming VCT relief by size of investment, 2019-20 to 2021-22
| Investment band | 2019-20 | 2020-21 | 2021-22 |
|---|---|---|---|
| Up to £1,000 | 1,610 | 1,820 | 1,025 |
| £1,000 to £2,500 | 1,260 | 1,175 | 1,065 |
| £2,500 to £5,000 | 1,790 | 1,995 | 2,215 |
| £5,000 to £10,000 | 3,135 | 3,425 | 4,450 |
| £10,000 to £15,000 | 1,485 | 1,680 | 2,235 |
| £15,000 to £20,000 | 1,650 | 1,775 | 2,505 |
| £20,000 to £25,000 | 1,075 | 1,195 | 1,735 |
| £25,000 to £50,000 | 2,875 | 3,175 | 4,885 |
| £50,000 to £75,000 | 880 | 1,010 | 1,595 |
| £75,000 to £100,000 | 795 | 910 | 1,465 |
| £100,000 to £150,000 | 435 | 510 | 905 |
| £150,000 to £200,000 | 895 | 950 | 1,730 |
| Total | 17,890 | 19,615 | 25,800 |
Figure 1: Distribution of the proportion of investors claiming VCT relief by size of investment, 2020-21 to 2021-22
In 2021 to 2022, 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 2021 to 2022. 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. The increase in investment in 2020 to 2021 suggests Covid impacts may have been lower than expected, or the success of certain sectors and businesses during the pandemic in conjunction with investors having more time and capital resources to spend allowed for an earlier rebound. This increase in investment was further shown in 2021 to 2022, with it being a record-breaking year for VCT investment. It is believed that this was due to a strong rebound from the Covid-19 pandemic as seen in the performance of the wider venture capital industry. Additionally, the freeze on pension allowances and the income tax personal allowance has enhanced the tax advantages of investment in a VCT and, therefore, the appeal of the scheme to investors.
Figure 1 shows the distribution of investors claiming VCT relief grouped by size of investment. Around 78% of VCT investors claimed tax relief under the VCT scheme for an investment of £50,000 or less; the largest number being in the £25,000 to £50,000 group with 19% of the total and the £5,000 to £10,000 group with 17% of the total. In 2021 to 2022 the proportion of VCT investors in the higher investment size categories (above £25,000) increased slightly compared to 2020 to 2021.
Figure 2: Number of investors claiming VCT relief via Self Assessment, 2004-05 to 2021-22
Figure 2 shows a time series of the number of investors who have claimed VCT relief from 2004 to 2005 to 2021 to 2022. The tax year 2021 to 2022 saw an increase in the number of investors compared with the previous year but is in line with the increase in investment into VCTs in the same year. The number of investors for 2021 to 2022 is the highest since 2004 to 2005.
5.2 Amounts invested by VCT investors
Similar to the number of investors, Table 1b shows a significant increase of 61% in the amount of relief claimed by VCT investors in 2021 to 2022.
Amounts have been rounded to the nearest £5 million. Totals may not sum due to rounding.
Table 1b: Amount of investment on which VCT relief was claimed by size of investment, 2019-20 to 2021-22
| Investment band | 2019-20 | 2020-21 | 2021-22 |
|---|---|---|---|
| Up to £1,000 | <5 | <5 | <5 |
| £1,000 to £2,500 | <5 | <5 | <5 |
| £2,500 to £5,000 | 5 | 10 | 10 |
| £5,000 to £10,000 | 25 | 30 | 40 |
| £10,000 to £15,000 | 20 | 20 | 30 |
| £15,000 to £20,000 | 30 | 35 | 45 |
| £20,000 to £25,000 | 25 | 30 | 40 |
| £25,000 to £50,000 | 110 | 120 | 185 |
| £50,000 to £75,000 | 55 | 60 | 100 |
| £75,000 to £100,000 | 75 | 85 | 135 |
| £100,000 to £150,000 | 55 | 65 | 110 |
| £150,000 to £200,000 | 175 | 185 | 335 |
| Total | 580 | 645 | 1040 |
Figure 3: Distribution of the proportion of investment for which VCT relief was claimed by size of investment, 2020-21 to 2021-22
In Figure 3, we see that the largest category of investment by amount in 2021 to 2022 was investments between £150,000 to £200,000. More precisely, 32% of the total amount invested is accounted for by only 7% of investors.
Figure 4: Comparison of the amount of investment on which relief was claimed via Self Assessment and total funds raised (£ million), 2004-05 to 2021-22
Figure 4 shows that the amount of relief claimed and total funds raised by VCTs are largely consistent year on year. In 2021 to 2022, around 93% of the total VCT investments were claimed through Self Assessment. The remaining amounts are assumed to be either claimed outside Self Assessment, not claimed at all or investors can’t claim the full amount as they do not have the Income Tax liability to offset the relief. The tax year 2021 to 2022 is a record breaking year for the amount of investment Income Tax relief was claimed on, which is consistent with funds raised by VCTs in 2021 to 2022 reaching record breaking levels.
6. Contact
Statistical contacts: M Hindley and M Solonina; [email protected]
Queries relating to investing in VCTs: Venture Capital Reliefs Team; [email protected]