The sector has raised £731m for investment in small businesses, the highest amount ever raised at the current level of 30% up-front tax relief and the second highest amount since VCTs’ inception.

Last year the VCT sector raised £728m.

This year’s total was the highest since 2005/6.

Ian Sayers, chief executive of the Association of Investment Companies (AIC) said: “The 2018/19 fundraising figure reflects consistent high demand for the VCT sector and the growing recognition of the benefits VCTs provide to investors.

“It is the second highest fundraising figure since VCTs were introduced, boosted by the pension changes and VCTs’ strong long-term record of delivering growth and income returns.

“VCT fundraising is crucial to the UK’s younger companies, as they will benefit from the VCT investment and expertise they need to grow.

“VCT-backed businesses deliver vital economic, social and environmental benefits, with jobs more than doubling after VCT investment. VCTs invest in important areas like healthcare, technology, education and the environment.

“VCT investment continues to be a catalyst for change at some of the UK’s fastest growing businesses.”