Some venture capital trust (VCT) managers are either not issuing shares or restricting capital raising again this tax year due to earlier successful fundraisings and the new VCT investment rules.

The 2016/17 tax year end is facing a lack of supply from many of the main players. There was a similar situation in the 2014/15 tax year, when £435 million was raised, £5 million less than in 2013/14 and the same amount as that raised in 2015/16, according to HMRC.

Leading VCT manager Baronsmead said its trusts are unlikely to seek to raise new funds in the current tax year, preferring to continue investing from the cash resources already available. This comes after the Baronsmead trusts paid out bumper dividends as it claimed the fiscal rules for VCTs penalise trusts for holding cash.

Equity investor Mobeus has taken a similar stance, with comments in several of its VCT reports saying there is no need to raise more funds in the current tax year. Alternative asset manager Maven is raising up to £8m for one existing £16.5m VCT which, as at 30 September 2016, had £12.2m sitting in cash following last year’s fundraising.

Paula Steele, managing partner at John Lamb Financial Planning, said: “In 2016/17 care needs to be taken in choosing fresh VCT investments – the danger is that too much money will spend too long waiting to find a suitable home in those VCTs which are open for business.”

Northern Venture Managers (NVM) said it does not anticipate public share offers in the current tax year. Its three Northern trusts will launch a non-prospectus ‘top-up’ share issue to maintain a comfortable margin of liquidity, which could raise about £4 million for each VCT. However, this may not stretch very far as priority will be given to existing investors.

These and many other VCT managers are finding investment conditions more challenging under the new rules. According to Baronsmead, the rate of new investment has slowed since the changes were introduced in November 2015. It claimed the number of suitable investment opportunities is improving but it is taking longer to establish compliance with new rules and the conversion to completed investments has proved difficult.