Investment trusts will also be exempt from VAT.

The move, which has been welcomed by the Association of Investment Companies (AIC), follows a similar ruling from the European Court of Justice last year in the case brought by the AIC and investment trust manager JP Morgan Claverhouse.

Daniel Godfrey, director general of the AIC, says: ‘This is a very welcome boost to the industry and VCT investors, who will benefit from this cost saving over the long term. It’s also good news for smaller companies which will benefit from around £10 million a year of added investment capital released by the exemption.’

Godfrey adds that the AIC has submitted a range of proposals to the government for consideration, which are aimed at allowing investment trusts to cover a wider range of asset classes.

‘This would improve competition in the savings market by enhancing the attractions of investment trusts,’ he concludes.

The AIC was founded in 1932 to represent the interests of the investment trust industry, which it estimates has total assets of £95 billion.

Related: A Guide to Venture Capital Trusts