Tax Efficient Investments

TAX EFFICIENT INVESTMENTS

Tax efficient investments offer various tax benefits to qualifying investments whilst simultaneously encouraging investment into the UK entrepreneurial business scene and are made through government-backed schemes such as SEIS, EIS & VCTs. The benefits of these types of investments vary from income tax relief to capital gains relief, through to loss relief and inheritance tax relief

We offer a range of tax efficient investments on GrowthInvest. Further information on each type is included on the dedicated sections below.

Summary

The Seed Enterprise Investment Scheme (SEIS) was introduced in 2012, and is similar to the EIS, though to qualify the companies must be smaller and at an earlier stage than for EIS. As these are therefore typically riskier investments, there are more substantial reliefs available.

Tax Benefits

The benefits of investing into an SEIS qualifying company include:

  • 50% Income Tax relief (SEIS) 30% (EIS).
  • Free of Capital Gains Tax (providing such investment is held for three years)
  • Ability to ‘carry back’ your investment to the previous tax year.
  • Any gains on the disposal or sale of shares after a period of three years are also free from capital gains tax.

  • Should the business fail within the three year period the investor can also receive up to 45% loss relief, which can be offset against their Income Tax.
  • Possible exemption of 50% of an existing Capital Gains Tax bill.
  • Up to 100% IHT relief (After two years of holding the investment).

Qualifying Criteria

There are several criteria that businesses will need to meet in order to qualify as an SEIS business, and some trades are also excluded. For example the business must:
  • Be a UK registered company
  • Have fewer than 25 employees.
  • Assets less than £200,000
  • The business cannot be more than two years old.

  • Must be an unquoted company (Not listed on any major stock exchange)
  • No previous other risk capital scheme investments.
  • No previous SEIS, EIS or VCT investments made.
  • Possible exemption of 50% of an existing Capital Gains Tax bill.
  • Up to 100% IHT relief (After two years of holding the investment)

Open Opportunities

We have a range of investment opportunities on the platform to help you build a diversified portfolio

View All Current Opportunities

Further Information

Further information on SEIS can be found on the HMRC website, as well as on EISA the trade organisation for the industry.

Summary

The Enterprise Investment Scheme (EIS) was introduced by the government in 1994 to promote investment into smaller, and therefore typically higher risk, companies. To encourage such investment, there is a range of benefits available to qualifying investors.

Tax Benefits

The benefits of investing into an EIS qualifying company include:

  • 30% Income Tax relief.
  • Possible unlimited and indefinite postponement of an existing Capital Gains Tax bill.
  • Ability to ‘carry back’ your investment to the previous tax year.

  • Any gains on the disposal or sale of shares after a period of three years are also free from capital gains tax.
  • Should the business fail within the three year period the investor can also receive up to 45% loss relief, which can be offset against their Income Tax.

Qualifying Criteria

There are several criteria that businesses will need to meet in order to qualify as an EIS business, and some trades are also excluded. For example the business must:
  • Be a UK registered company
  • It must have less than 250 full time employees (499 for knowledge intensive companies)

  • Must be an unquoted company (Not listed on any major stock exchange).
  • Gross assets must not exceed £15 million prior to share issue or £16 million straight after a share issue.

Open Opportunities

We have a range of investment opportunities on the platform to help you build a diversified portfolio

View All Current Opportunities

Further Information

Further information on EIS can be found on the HMRC website, as well as on EISA the trade organisation for the industry.

Summary

A Venture Capital Trust (VCT) is a publicly listed company. The company, run by a fund manager, invests in a number of small unquoted companies. Therefore an investor into a VCT is investing in the fund manager’s selected portfolio of earlier stage UK companies, and thereby helps them to grow. To encourage investment of this sort, the government provides a number of tax benefits to qualifying UK investors.

Tax Benefits

The benefits of investing into a VCT qualifying company include:

  • Dividends from your VCT shares are not subject to income tax.
  • 30% Income Tax Relief.

  • Free of capital gains tax.
  • Capital Gains Deferral relief (provided investment is held for 5 years)

Qualifying Criteria

There are several criteria that businesses will need to meet in order to qualify for VCTs, some trades are also excluded. For example the business must:
  • A company must be unquoted (companies whose shares are listed on the AIM market are considered unquoted)
  • The company must have fewer than 250 full time employees (or 500 for a knowledge-intensive company)

  • Gross assets must be less than £15 million prior to investment, and £16 million straight afterwards.
  • It must be a permanent establishment in the UK

Open Opportunities

We have a range of investment opportunities on the platform to help you build a diversified portfolio

View Current VCT Opportunities

Further Information

Further information on VCTs can be found on the HMRC website, as well as on the AIC website, the trade organisation for the industry.

RISK

EIS, SEIS & VCT qualifying businesses are high risk because they are early stage businesses.
Source: https://www.gov.uk/topic/business-tax/investment-schemes

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