Currently the investment trusts can only put £1m into companies, but under proposals outlined by Chancellor George Osborne in his pre-Budget statement, VCTs will be free to put more equity capital into small businesses in a bid to kickstart the economy.
“The government will remove the £1m investment limit per company for VCTs to reduce the administrative burdens of the scheme,” the statement explains.
Osborne has not budged on tax relief for the trusts, which will remain at 30 per cent.
Further relief comes through a relaxation of the Enterprise Investment Scheme, Downing Street easing the connected person rules and definition of shares that qualify for breaks.
Mark Florman, chief executive of the British Private Equity and Venture Capital Association, said the statement is the “right response” to the threat of the eurozone crisis.
He added: “The further liberalisation of the EIS and VCT schemes will also play a valuable part in sustaining and supporting the start-up business community through what will clearly be a challenging 12 to 18 months for the British, European and international economies.
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