The first in this series is with James Dmello, Head of IFA Distribution at Fuel Ventures. He provides his outlook on the year ahead and outlines the key lessons that investors will have learnt from the 2023-24 tax year.
Q: It’s a new tax year but what does that mean for tax-efficient investing?
“After a short breather for IFAs and providers from the chaos that is always the last few weeks of the tax year, A new tax year brings fresh opportunities for investors to benefit from tax-efficient investment schemes like the SEIS, EIS, and VCT. As most IFAs will be aware, these schemes are designed to encourage investment into innovative, young, growth-oriented companies by offering attractive tax reliefs to mitigate the risks associated with early-stage companies.
“For investors, aside from the investment merit, this means the ability to offset a portion of their investment against their income tax liability, potentially defer capital gains, and benefit from tax-free growth on these investments. Given the recent cuts in the CGT allowance & dividend allowance, It’s an excellent time to reassess financial goals and consider how leveraging these schemes could align with long-term investment strategies while supporting the UK’s vibrant startup ecosystem.”
Q: Will it be a happy new tax year for tax-efficient investing?
“I think so, despite broader economic & political uncertainties, the stability and continued availability of SEIS, EIS, and VCT schemes provide a reliable avenue for investors looking to diversify their portfolios and support young companies with potential for substantial growth.
“This year, we are likely to see more investors taking advantage of these opportunities as awareness of their benefits grows. The landscape of tax-efficient investing is expanding with new funds coming to the market (Fuel Ventures launched our new VCT in January 2024 and raised one of the largest maiden fundraises for a new VCT provider thanks to our partners and investors) and this, coupled with the reversal of the angel investor rule changes, suggests that investors can approach the new tax year with justified optimism.
