More than half of advisers expect to see levels of client demand for VCTs rising over the next year as a result of the pension limit restrictions, research has suggested.

The survey by Albion Ventures showed this expectation had increased from 32% last year.

The research reveals that:

• 84% of IFAs have been advising clients on the danger of breaching the reduced pension lifetime allowance limit and, of these, 31% are anticipating some of their clients exceeding it this tax year

• Advisers estimated that 11% of clients will exceed the £1m lifetime pension limit by retirement age

• This rises to 16% among clients in their 40s who are likely to be making contributions to their pensions over a further 20 years

• Some 54% predicted continued rise in client demand for VCTs over the next year.

This uplift in VCT interest following the pension changes has resulted in high levels of investor demand for VCTs currently raising money, the firm said.

Will Fraser-Allen, deputy managing partner at Albion Ventures, said: “These findings underline how clients are increasingly aware of the need to look beyond their pension and diversify their investments across a range of tax-efficient products in order to fund their retirement.

“It’s encouraging that the message is getting through to high earners in their forties and fifties who are increasingly attracted to VCTs both for their tax advantages but also their ability to generate exciting long term returns.”

A number of VCT offers are either closing or fast approaching their target limits ahead of the end of the tax year, it said, while adding that Albion’s VCT Prospectus Top Up Offers have already raised over £21m and it has now increased the total from £25.5m to £36m.