£632 million has been invested into Venture Capital Trusts (VCTs) this tax year, marking a 9.2% increase from the previous year. This resurgence follows a period of stagnation post-pandemic. Factors such as soaring interest rates have impacted smaller businesses' valuations, yet demand for VCTs remains strong. With capital gains tax and dividends tax allowances diminishing, investors are increasingly turning to VCTs for their favorable tax relief features, including up to 30% income tax relief and tax-free gains, thereby fostering economic growth through investment in startups.
£632 million has been invested in VCTs so far this tax year, up 9.2% on the same time last year. It's a return to trend after a couple of sluggish post-pandemic years.
The government only provides these generous tax reliefs because it pays off in spades. The more money goes into fast-growing startups, the more jobs they create.
With taxes at a 70-year high, the massive cuts in CGT and dividends tax-free allowances are savaging peoples' investments, making VCTs an attractive option.
VCTs offer income tax relief of up to 30% on investments, which along with their tax-free gains, makes them a compelling choice after ISAs and pensions.
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