Fundraising for the 2016/17 tax year to 31 December 2016 was 53% up on compared with the same period in 2015/16.

Data published by the Association of Investment Companies showed £169.5m was raised compared to £110.8m at 31 December 2015.

The AIC stated that an increased level of fundraising reflected early VCT offers being launched in the 2016/17 tax year, continuing demand for VCT offers that were open up to the end of 2016 and strong support for VCT dividend reinvestment schemes in the 2016/2017 tax year.

Ian Sayers, AIC chief executive, said: “This fundraising data is a real vote of confidence in the VCT sector. The pension rule changes and reduction in the lifetime allowance have clearly acted as a boost to investor interest along with its established track record both from a growth and income perspective.

“It is hard to predict what the final fundraising total will be for 2016/2017, as managers come to terms with recent rule changes. But what is not in doubt is that demand for VCTs remains strong.”

Richard Troue, head of investment analysis, Hargreaves Lansdown, said: “VCTs are raising more this year than last, but that doesn’t mean there’s an endless supply, and the best offerings typically sell out fastest, so investors should act quickly to avoid disappointment.

“VCTs come with very generous tax breaks, offering investors the ability to get a tax rebate worth 30% of the value of their investment. For those who have already used up their pension and ISA allowances this opens up a third way to legitimately save tax, while at the same time saving for the future.

“One of the lesser known facts about VCTs is that they deliver most of their returns through dividends, which are tax-free. In a world where ultra-low interest rates and falling bond yields have squeezed traditional sources of income, VCTs therefore offer a tax-efficient alternative for investors who already have more mainstream income portfolios.”