According to the report there is around £411 million ‘sitting on the balance sheets of existing VCTs’ and ‘£718 million that has been raised by new VCTs in the 2005/2006 tax year’.

The amount of money to which newly established VCTs have access has soared over the past month due to the expectation that rules governing VCTs would change on 6 April.

This was confirmed in the March Budget when Chancellor Gordon Brown reduced the income tax relief available to private investors in VCTs from 40 to 30 per cent. Moreover, to qualify for all the tax breaks available, investors will be required to hold the shares for more than five years, rather than the present three.

The report claims the deadline has resulted in a frenzy of investment and cash raising amongst VCTs with Rhonda Nichols of F&C Asset Management, commenting that ‘every man and his dog was out raising funds’ ahead of the 5 April cut-off.