The announcement of a 40 per cent income tax break has resulted in the launch of 45 VCTs in the current tax year, according to the Bestinvest website. This is the highest number of VCTs ever launched in a single season and is five times the average number of VCTs launched in any prior year. This explosion has brought with it good things with plenty of innovation and a positive focus by most leading players on discounts and dividends. However, it has also brought with it such a spread of product that it has caused severe indigestion in the industry. According to Bestinvest, so far, investors have bought 261m out of a total on offer of 1.037bn, a consumption rate of just over 25 per cent. The products on offer include 16 Aim VCTs which are aiming to raise 334.2m, 22 generalist VCTs aiming to raise 593.8m and seven specialists aiming to raise 99m. So far, only 84.9m has been raised in Aim VCTs des-pite the presence of such well known brand names as Inv-esco, Framlington and Artemis. There has been a fear among IFAs that if too much was rai-sed by Aim VCTs, there would be a big reservoir of cash chasing a limited supply of opportunities which might create over inflated prices among the qualifying Aim companies. However, Sean O’Flanagan of Unicorn believes these fears are groundless. He says last year there were 355 new issues on Aim, raising 4.8bn, of which about 500m were VCT qualifying investments. This year, if anything, the pace of new issuance has increased and with the advent of new Aim VCT managers, the brokers are making more effort to structure Aim companies so that they qualify for VCT money. Sean believes that even if all of the Aim product available was taken up this year, there would be plenty of choice companies for Aim managers to chose from. As we enter the final weeks of the tax year, the pace of VCT investing seems to be rising, with Matrix, which is promoting three VCTs, now taking over 600,000 a day. If the industry is to reach 500m, as some commentators predict, this will require inves-tors to invest at the rate of 17m per business day which may be achievable given that this year there is no incentive for anyone to write out their che-que prior to the tax deadline. IFAs are, however, now faced with a new dilemma. Of the 45 VCTs on offer, 19 have raised 1m or less. For those issuing top-ups to an existing share issue, this is not a problem but for those issuing new funds or C shares, anything less than 5m will not provide an adequate spread of investments and is unlikely to be economic to run from the managers’ perspective and will almost certainly hit the expenses cap from a shareholder’s perspective. Proven has ack-nowledged this and has ann-ounced that it will be pulling its offer and returning money to shareholders. The premier league are the VCTs which have already rea-ched the safety zone in terms of size and are the VCTs that are most likely to fill up or get close to capacity as we near the close of this tax year. The final number that will be raised in this tax year is still very difficult to estimate as the market is giving contradictory signals. Matrix, which has promoted VCTs since they were first launched, has sent out more VCT prospectuses to IFAs and investors direct than in any previous year. During roadshows round the country, O’Flanagan obs-erved that even though VCTs have had lots of press comment, many IFAs are still una-ware of the tax breaks that are available. This is supported by Matrix, whose business so far has come from IFAs who have done VCTs in the past rather than from IFAs who are using this product for the first time. With Easter taking two working days off the end of the tax year, the top VCT providers are gearing up to cope with several days of very high volumes at the end of March. The signs are that introducing a new tax break takes time to filter through and more work will need to be done next year to spread the VCT story.