HAVE you ever waited absolutely ages for a bus and then several turn up at the same time? That’s what it currently feels like for investors interested in Venture Capital Trusts with a staggering 22 VCTs currently seeking new cash.

For those unfamiliar with them, VCTs are stock exchange-listed investment companies with a brief to invest in fledgling UK enterprises that are either unquoted or listed on AIM, the London Stock Exchange’s junior market. To qualify for VCT investment a company must meet various criteria set by the Government. These tests cover their number of staff, the amount of assets they own and how the funds received will be used. Certain types of activity – such as power generation, farming and property development - are specifically excluded. The types of businesses backed by VCTs vary enormously but range from technology companies to restaurant chains.

To incentivise investment into these types of high-potential businesses, VCTs are provided with a cocktail of tax perks. Subscriptions to VCT new share issues by UK taxpayers attract a 30 per cent income tax credit – repayable if the shares are sold within five years – and dividends and gains are also tax free.

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At a time when over 4.7 million Britons are paying tax at the higher and additional rates but the amount that can be saved into pensions on an annual basis and over a lifetime has been steadily reduced, demand for VCTs as an alternative form of tax efficient investing has been on the rise.

While traditionally most new VCT fund raising takes place in the final months of the tax year, Chancellor Phillip Hammond’s decision to move the date of the Budget from March to November has changed all that, leading to the current wave of offers. Some of the most appealing VCT share offers will be long closed by the end of the tax year, potentially leaving those investors who wait until early next year with limited choice.

But the current flurry of fund raising is also being fuelled by the state of UK politics. With pressure mounting on the Government to relax wage constraints in the public sector and neutralise the student backlash on tuition fees in England and Wales there is the potential for the Mr Hammond to deliver a curve ball on any number of tax reliefs on November 22 as he scrambles to plug a hole in the finances.

In the case of VCTs the Government is also in the midst of a broad-ranging review of how to best encourage the long-term financing of innovative growth companies. This could, hypothetically, see a switch away from providing tax incentives for private investors to a more direct investment approach, replicating the European Investment Fund. It is no wonder, then, that so many VCTs have decided to err on side of caution and raise funds early this year.

For investors with cash burning a hole in their pockets and a big income tax liability, the abundant choice now available is good news. Some of the most attractive offers open are from Mobeus, Unicorn and the Albion.

The Mobeus VCTs provide investors with access to an existing portfolio of well established, unquoted companies such as Virgin Wine alongside newer deals in growth companies such as Wetsuit Outlet, an online retailer of water-sports products and expanding restaurant chain Tapas Revolution.

Unicorn AIM VCT is the largest VCT focused on AIM companies and is incredibly diversified with 90 holdings that include Cambridge based Abcam, which develops testing kits for life scientists across the globe, and award-winning natural animal feed additives producer Anpario.

For more cautious investors the Albion VCTs provide exposure to a sizeable portfolio of defensive asset-backed investments alongside fast growth, technology-enabled companies. Examples include Radnor House, an independent school near Sevenoaks in Kent where a legal first charge on the property provides an element of security and Locum’s Nest, an app-based tool to help match locum doctors with vacant shifts in NHS Trusts.

VCTs are a great way to back exciting businesses with huge potential. But it is important not to forget the tax incentives are there for a reason: younger, smaller companies are higher risk investments.

Jason Hollands is managing director of Tilney Group.