The Association of Investment Companies (AIC) has welcomed the announcement that the UK Chancellor George Osborne will allow VCTs to invest greater amounts in smaller businesses. Currently the VCT scheme rule limits any one VCT to investing no more than GBP1 million in a single company in any 12 month period.
This rule has created significant administrative burdens for VCTs, preventing individual VCTs from providing all the funds a small company might require, even where the amount required is well within the overall limits set by the scheme. This means that a company seeking, for example, £5 million of investment has to reach agreements with five VCTs rather than one.
Ian Sayers (pictured), Director General of the Association of Investment Companies (AIC) says: “The Chancellor’s decision to remove the £1million investment limit demonstrates his commitment to reducing red tape in the VCT sector. Making this change will significantly enhance the capacity of the sector to support entrepreneurial businesses. The impact of this change should not be underestimated – it could transform the VCT sector.
“The burden of agreeing investment terms with multiple funding partners significantly increases costs. Removing this limit will mean individual VCTs can invest more efficiently, grow in size and secure economies of scale. At the same time, SMEs will be more able to identify a one-stop-shop partner able to meet their funding needs.
“The Chancellor has listened to our representations and we look forward to working with him and his team to deliver this reform.”
