How To Invest Smartly in The UK Companies


Saving on taxes and investing with success 


Are You Ready To Invest

No matter where in life you are financially, investing your money is a great way of securing your future and making the most of the funds you’ve gathered. There is, however, a great difference between the types and sizes of investments individuals and businesses can commit to. 


This article is dedicated to those, who are already experienced and well-grounded in the world of finances and financial security. The following advice should not be taken without first estimating one’s potential for investing and considering the financial stability of one’s situation. The investments and tax-relief options mentioned below can only apply to those who are able to safely invest in highly volatile assets and seek to receive greater tax relief on the income they are already gaining. 


Please remember that all the tax and product guidelines mentioned in this article are correct at the time of its writing, but could change in the future. Tax benefits depend on your circumstances. 


Tax-Efficient Investments 

Investing with tax relief in mind is a great challenge to take up. If you want to ‘keep more of your own money’ you need to find ways in investing efficiently and with the least tax charge placed over your income. The three products mentioned below offer a unique set of opportunities and qualities, which you can take advantage of. 


Investing in VCTs, EISs, or SEISs could be your way of gaining a tax-relief in multiple ways, but before we dive into the details let’s briefly summarise what makes them so advantageous. Investing in either of these products has the potential of both short and long-term rewards. In the long run, you’re likely to back the winner and gain on the growth gains of the company, of which the shares you’ve invested in. When it comes to the short-term rewards, tax relief from the government is offered to those who decide to support high-risk, young businesses in the UK. With these aspects in mind, let’s dive into the details about these three products. 


Venture Capital Trusts (VCTs)

Venture Capital Trusts (VCTs) are stock market listed companies, that specialise in investing in small, dynamic, and often unquoted businesses. Their strategy includes high diversification, mitigating the potential risk of loss to a degree. To invest in VCTs you can access their shares on the stock market or reach out to them directly. 


When it comes to their advantageous qualities, these are the few highlights you should become aware of. 

  • Potential of income tax relief of up to 30% 
  • Potential of tax-free dividends (this is not guaranteed and will depend on the details) 
  • Potential of a tax-free growth profit 

It is important to note that in order to gain and keep the tax-relief qualities of the VCTs, you need to keep the investment on hold for at least five years. 


Enterprise Investment Scheme (EIS)

Enterprise Investment Schemes (EISs) invest directly in the companies targeted by VCTs. The major difference lies in the fact that the investment done by EISs is direct, which makes it more volatile. What’s more, EISs are often less diversified, which increases the risk even more. To invest in EISs you need to use an accredited broker. 


With greater risk come more incentives. The government is able to offer you these advantages, in exchange for investing in EISs. 

  • Potential of income tax relief of up to 30%
  • Potential of carry back, which enables you to claim tax relief from the year before, as long as your EISs credit was not used 
  • Potential of a tax-free growth profit 
  • Potential of inheritance tax relief
  • Potential of loss relief, which enables you to offset the loss against the same or previous year’s income tax 

As you can see, this investment option offers more advantages but comes with a greater risk. 


Seed Enterprise Investment Scheme (SEIS)

Seed Enterprise Investment Schemes specialise in investments in businesses with even smaller experience and revenue. This type of investment often includes diversifying the capital between 5-10 developing companies, buying the shares directly within them. SEIS is even more volatile and risky than VCTs and EISs, but come with greater reliefs. To invest in SEIS you need to reach out to a specialised broker. 


The potential rewards of SEIS investing include: 

  • Potential of income tax relief of up to 50% 
  • Potential of carry back
  • Potential of a tax-free growth profit 
  • Potential of 50% capital gains reinvestment relief, when you decide to reinvest the gains in another or the same SEIS-admitted company 
  • Potential of inheritance tax relief
  • Potential of loss relief 

SEIS investing offers a great range of advantages that come with the price of a risky, most volatile of all three above investment options. 


How Much Can I Invest

When it comes to the investment limits per tax year, these are the options for each of the above: 

  • VCT – up to 200.000 per tax year
  • EIS – up to 2 million per tax year
  • SEIS – up to 100.000 per tax year 

Time To Consider

With the information outlined in this article, you are ready to consider your next move in investing. Whichever of the options you find most interesting, we would strongly recommend researching the topic further. Start Up Business Advisors Ltd does not offer investment or personal tax advice we offer only introductions to opportunities to self-certified, high net-worth and professional investors that understand the risks, which you can take advantage of. If you’d like to discuss your options with one of our experts, please book the free consultation call today


We hope that with the help of our dedicated team of experts, you will make the most of your money and secure a better future for yourself and your loved ones.