Venture capital trusts (VCTs) raised £731m for investment in small businesses during the 2018/19 tax year according to the latest figures from the Association of Investment Companies (AIC).
The figure marks the highest amount ever raised at the current level of 30% up-front tax relief and the second highest amount since the inception of this type of product in 1995.
For the 2017/18 tax year, the sector raised £728m, and £542m in the tax previous year. The only year to beat this year's record was 2005/2006, which saw £779m raised in VCTs.
Ian Sayers, chief executive of the AIC, said: "The 2018/19 fundraising figure reflects consistent high demand for the VCT sector and the growing recognition of the benefits VCTs provide to investors.
"It is the second highest fundraising figure since VCTs were introduced, boosted by the pension changes and VCTs' strong long-term record of delivering growth and income returns."
Sayers said VCT fundraising is crucial for the UK's younger companies, as they benefit from investment and expertise needed to grow.
He added: "VCT-backed businesses deliver vital economic, social and environmental benefits, with jobs more than doubling after VCT investment.
"VCTs invest in important areas like healthcare, technology, education and the environment. VCT investment continues to be a catalyst for change at some of the UK's fastest growing businesses."
Historic VCT fundraising figures ex enhanced share buybacks
|Tax year||Fundraising (£millions)|
Popular offers in high demand
A question of structure