Update for Shareholders: Autumn Budget

Update for Shareholders: Autumn Budget
Following the Chancellor’s Autumn Budget announcement, Albion Capital has issued the following update regarding changes to the Venture Capital Trust scheme.

Summary of Changes:
The Government has confirmed that from April 2026, the upfront income tax relief on VCT investments will be reduced from 30% to 20%. Simultaneously, the Government will modernise the scheme by increasing the asset and investment limits for VCTs.

Our View
The Government has presented the industry with a trade-off: empowering VCTs to back larger, later-stage companies, while asking investors to accept a reduced tier of upfront relief.

We welcome the doubling of VCT investment limits, a move we championed under the Growth Beyond Limits campaign. It correctly identifies that scaling British companies need support for longer to compete on the global stage. This is a positive development for shareholder’s portfolios as it allows us to hold and provide deeper support to our most successful portfolio companies for longer, rather than being forced to exit too early.

However, the Government’s decision to reduce income tax relief is disappointing news. We have long highlighted the importance of this relief as a vital mechanism that compensates investors for the risk associated with backing early-stage companies.

Reducing the tax incentive creates a potential risk that the flow of capital into the sector could slow down, undoing the progress offered by the higher limits.

Next Steps
We are currently engaging with the Treasury to understand the economic modelling behind these reforms. The Treasury has issued a call for evidence to improve the support these schemes provide to the UK’s most promising companies and we look forward to participating in the consultation.

Impact on Investors
It is important to note that these changes do not come into effect until April 2026.

• Current Tax Year (2025/26): Unchanged. Investments made in the current tax year continue to attract 30% income tax relief.
• Strategy: Our focus remains unchanged: backing the most innovative founders to generate the returns that drive investor confidence.