Members of Parliament have expressed support for restoring a tax relief rate for venture capital trusts (VCTs) that was recently reduced, in a move aimed at boosting investment in innovative and rapidly growing companies. Alan Mak, a former Treasury minister, led the call in an open letter addressed to John Healey, urging the government to reinstate the previous 30 percent upfront income tax relief for VCTs in the upcoming budget.

The letter, endorsed by 11 MPs along with various industry representatives, highlights the role that venture capital trusts play in channeling private capital into high-growth firms. These companies are viewed as key drivers for creating skilled employment opportunities and enhancing productivity outside the traditional economic centers of London and the southeast.

The tax relief rate had been lowered from 30 percent to 20 percent under the leadership of Rachel Reeves, the Chancellor of the Exchequer, a decision that critics argue could inhibit investment in promising sectors. Supporters of the reversal contend that restoring the higher rate will incentivize greater financial commitments to businesses that contribute to broader regional economic development and innovation.

The government has yet to announce whether it will respond to the MPs' appeal ahead of the forthcoming budget, which is widely anticipated to address measures impacting growth and investment incentives.