In the 2015/16 tax year VCTs raised £435m of assets through fund raisings, which is the exact same amount raised in the 2014/15 tax year.

Interestingly though this amount was raised by 43 VCTs last tax year compared with 57 in the previous year, which Wealth Club’s investment director Ben Yearsley says demonstrates the continued popularity in the tax efficient product.

Indeed since the introduction of VCTs back in 1995 some £6.4bn of funds have been raised, although this year saw a decline in the number of VCT fund available to investors with only 80 in existence today versus 94 last year.

Yearsley said the declining number of funds is partly owing to some limited life VCTs winding up, but is also the result of mergers between some funds which are run by the same management companies. For example the Baronsmead VCTs have gone from five in number to three this year, because of two mergers.

“These mergers in the long run should be good for investors as larger VCTs should enable lower running costs and better liquidity in the secondary market,” says Yearsley.

“In my view, apart from delivering good long term tax free returns to investors, one of the key reasons behind their continuing popularity is the restrictions on annual pension allowances gradually introduced over the last few years,” he adds. “High earning sophisticated investors, who can no longer invest large sums into pensions, are viewing VCTs as an alternative.

The release of how much was raised by VCTs in the last tax year comes in the same week that the Association of Investment Companies (AIC) revealed that investments in VCTs accounted for £225m of funding for 115 small and medium-sized enterprises (SMEs) in 2015.

Ian Sayers, chief executive of the AIC, said: “VCTs are a boost to the UK economy providing vital finance and expertise to smaller British companies and stimulating high levels of job creation. VCT investment is risky and not all VCT-backed companies will be a success, but the performance of VCT-backed businesses is impressive nevertheless.

“VCT-backed businesses have high levels of innovation and significant levels of exports, indicative of their potential value to the UK economy.  Moreover, VCTs are good value for taxpayers, as investee companies contribute more in tax than the cost of the initial tax relief.”

For more information, see YourMoney.com’s VCT guide.