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Tax Efficient Investments

Support growing businesses while gaining valuable tax benefits

The UK has a strong tradition of innovation, with new and fast-growing companies driving the economy forward. By investing in these early-stage businesses, you can support their growth and benefit from generous government-backed tax incentives. Schemes such as Venture Capital Trusts (VCTs), Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) offer:

  • Attractive tax reliefs
  • The chance to back ambitious UK companies
  • Potential long-term growth opportunities

These investments reward you for taking on the risks of supporting young businesses — offering both immediate tax advantages and the potential for future gains.

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Venture Capital Trusts (VCTs)

Venture Capital Trusts (VCTs) invest in early-stage and fast-growing UK businesses. In return for supporting British enterprise, investors receive a range of valuable tax benefits:

  • Up to 30% Income Tax Relief Available on investments of up to £200,000 per tax year, offering up to £60,000 in income tax relief. (Must hold shares for a minimum of five years.) 
  • Tax-Free Dividends All dividends paid by VCTs are free from income tax.
  • Tax-Free Growth No Capital Gains Tax (CGT) is payable on any gains when selling VCT shares.
  • Support for UK Innovation Your investment helps fund UK small and medium-sized enterprises (SMEs), contributing to job creation and economic growth.

Enterprise Investment Scheme (EIS)

The Enterprise Investment Scheme (EIS) is designed to encourage investment into small, early-stage or AIM-listed UK companies. It provides a range of powerful tax incentives in return for supporting higher-risk businesses.

  • Up to 30% Income Tax Relief Apply against your income tax bill when investing in qualifying EIS companies. (Three-year minimum holding period.)
  • Invest up to £1 million per tax year Increased to £2 million when at least £1 million is invested in knowledge-intensive companies.
  • Tax-Free Growth No Capital Gains Tax (CGT) on any growth if shares are held for the qualifying period.
  • CGT Deferral Relief Pay no CGT upfront — tax can be deferred when reinvesting gains into an EIS.
  • Loss Relief If the investment is realised at a loss, you can offset that loss against current or future income or capital gains.
  • Potential Inheritance Tax (IHT) Exemption Most EIS investments qualify for Business Relief after two years, meaning they can become IHT-free if still held.

Seed Enterprise Investment Scheme (SEIS)

The Seed Enterprise Investment Scheme (SEIS) is designed to support very early-stage UK companies. It offers some of the most generous tax incentives available to investors willing to back start-ups at their earliest growth phase.

  • Up to 50% Income Tax Relief Apply against your income tax bill on investments up to the annual SEIS limit. (Three-year minimum holding period.)
  • Invest up to £200,000 per tax year Increased from previous limits to help channel funding into innovative start-ups.
  • Tax-Free Growth No Capital Gains Tax (CGT) on any gains if shares are held for the qualifying period.
  • 50% CGT Reinvestment Relief Half of any capital gains reinvested into a qualifying SEIS can be exempted from CGT.
  • Loss Relief & Potential IHT Exemption Losses can be offset against income or capital gains, and most SEIS shares qualify for Business Relief after two years, potentially making them IHT-exempt if still held.

AIM IHT ISAs

AIM IHT ISAs invest in portfolios of eligible AIM-listed companies that qualify for Business Relief, offering a potential way to reduce Inheritance Tax while keeping the familiar ISA structure.

  • No Capital Gains Tax or UK Income Tax AIM ISAs benefit from the same tax advantages as standard ISAs during your lifetime.
  • Full Investment Control & Flexibility Funds remain in your own ISA wrapper, with the ability to add, withdraw, or switch investments (subject to ISA rules).
  • Potential 100% Inheritance Tax Exemption Eligible AIM shares may qualify for Business Relief after two years, potentially removing them from your estate if still held at death.

Venture Capital Trusts (VCT) Enterprise Investment Schemes (EIS) Alternative Investment Market (AIM) & The Seed Enterprise Investment Scheme (SEIS) invest in assets that are high risk and can be difficult to sell such as shares in unlisted companies. The value of the investment and the income from it can fall as well as rise and investors may not get back what they originally invested, even taking into account the tax benefits. These products are not suitable for new investors.

Our Simple, Supportive 4-Step Process

01.Discover – Understanding Your Goals & Tax Position

We begin by getting to know you: your income, assets, tax exposure, family priorities, and long-term financial goals. This ensures that any tax-efficient plan is personal, accurate, and built around what truly matters to you.

02.Design – Building the Right Tax-Efficient Strategy

Using whole-of-market access, we compare VCT, EIS, SEIS, AIM IHT ISAs, pensions and trusts. We then design a tailored investment strategy that aims to make effective use of available tax reliefs, while remaining compliant and aligned with your objectives and risk profile.

03. Implement – Selecting & Managing High-Quality Providers

We complete rigorous due diligence on all investment providers, reviewing their track record, risk controls, liquidity, and growth potential. We then implement the strategy with care, transparency, and clear explanations, ensuring you understand every step.

04. Review – Ongoing Support, Monitoring & Tax Planning

Tax laws change — and so do your circumstances. We provide regular reviews, rebalance portfolios where appropriate, track available tax reliefs, update you on regulatory developments, and recommend adjustments when needed. This aims to keep your plan effective, compliant and aligned with your objectives over time.

Venture Capital Trusts (VCTs)

Venture Capital Trusts (VCT) Enterprise Investment Schemes (EIS) Alternative Investment Market (AIM) & The Seed Enterprise Investment Scheme (SEIS) invest in assets that are high risk and can be difficult to sell such as shares in unlisted companies. The value of the investment and the income from it can fall as well as rise and investors may not get back what they originally invested, even taking into account the tax benefits. These products are not suitable for new investors

Key benefits
  • Up to 30% income tax relief — up to £60,000 per tax year when buying newly issued VCT shares
  • Annual allowance — invest up to £200,000 each tax year
  • Tax-free dividends — no need to declare them on your tax return
  • Tax-free growth — no Capital Gains Tax on profits

The remedy allows you to retrospectively choose the better scheme for the 2015–2022 period.

Enterprise Investment Scheme (EIS)

The Enterprise Investment Scheme (EIS) supports investment into small, early-stage UK companies usually privately-owned or AIM-listed. You can invest directly in individual businesses or through a professionally managed EIS fund.

Key benefits

Up to 30% income tax relief

Save up to £3,000 on a £10,000 investment. Relief can be used against this year’s tax bill or carried back to the previous year.

Generous annual investment limit

Invest up to £1 million per tax year — or up to £2 million if at least £1 million is invested in knowledge-intensive companies.

Tax-free growth

No Capital Gains Tax on profits from EIS shares.

Capital gains deferral

You can defer gains from other investments for as long as the EIS investment is held.

Loss relief

If the investment doesn’t perform, you can offset losses against your income or capital gains.

Potential Inheritance Tax relief

EIS shares may qualify for Business Relief, meaning they could be passed on free of IHT after being held for two years and at death.

Enterprise Investment Scheme (EIS)

The Seed Enterprise Investment Scheme (SEIS) supports very early-stage UK businesses. These companies carry higher risk, so the tax reliefs are more generous than EIS.

Key benefits

Up to 50% income tax relief

Save up to £5,000 on a £10,000 investment — can be used this year or carried back to the previous year.

Annual allowance

Invest up to £200,000 per tax year.

Tax-free growth

No Capital Gains Tax on profits from EIS shares.

Up to 50% CGT reinvestment relief

Reduce the CGT on gains from other assets by reinvesting into SEIS.

Loss relief

If the investment doesn’t perform, you can offset losses against your income or capital gains.

Potential Inheritance Tax relief

SEIS shares may qualify for Business Relief after 2 years and at death.

  • Risk Disclosures
  • Important Risks to Consider
  • These tax-efficient investments carry higher risks than traditional investments. Before investing in VCTs, EIS, SEIS or AIM IHT ISAs, you should be aware of the following:
  • Capital at risk
  • You may not get back the full amount you invest. These investments involve early-stage or smaller companies, which are more likely to experience financial instability or fail.
  • Long-term investment horizon
  • Tax benefits generally apply only if shares are held for a minimum period
    • VCT: 5 years
    • EIS: 3 years
    • SEIS: 3 years
    • AIM IHT ISAs: 2 years (and held until death for IHT relief)
  • Selling earlier may result in loss of tax benefits.
  • Valuation risk
  • Shares in unlisted or AIM-listed businesses can be volatile and difficult to value. Prices may rise or fall sharply.
  • Liquidity risk
  • These investments can be hard to sell quickly. There may be no active secondary market.
  • Tax rules may change
  • Tax reliefs depend on current legislation and your personal tax position. HMRC rules can change, which may impact outcomes.
  • Business Relief eligibility is not guaranteed
  • For AIM IHT portfolios and some EIS companies, eligibility for Business Relief depends on HMRC approval and the company continuing to meet qualifying criteria.
  • Diversification limits
  • VCTs, EIS and SEIS portfolios may be concentrated in a small number of companies or sectors.
  • If you're unsure whether these investments are suitable for you, we strongly recommend speaking with a registered Financial Adviser.

AIM IHT ISAs

An AIM Inheritance Tax (IHT) ISA is a Stocks & Shares ISA that holds AIM-listed companies. Unlike a standard ISA, it may qualify for Inheritance Tax relief if the shares:

  • Are held for at least two years
  • Remain eligible for Business Relief
  • Are still held at death%
Key benefits
  • No Capital Gains Tax or UK income tax on investment returns
  • Full control of your ISA with access to cash if needed
  • Potential IHT relief after two years, helping reduce your estate’s tax bill

AIM ISAs offer both ISA tax advantages and potential IHT savings, but they invest in smaller, higher-risk companies, meaning values can fluctuate.

What sets VCTs, EIS and SEIS apart?

Although all three invest in young, high-growth companies, they differ in how they’re structured and the type of tax reliefs they offer.

VCTs (Venture Capital Trusts)

You buy shares in the trust, not directly in the companies. Each share gives you exposure to the whole portfolio. VCT shares are listed, so although there are restrictions, you can usually sell them on the market.

EIS and SEIS

You invest directly in the underlying businesses. These companies are usually unlisted, meaning you can only exit when the company is sold, listed, or refinanced.

EIS and SEIS portfolios also tend to hold fewer companies, so they are generally less diversified and higher risk than VCTs.

How do VCT, EIS and SEIS tax reliefs
compare at a glance?

VCT EIS SEIS AIM IHT ISA
Type of investment Listed investment
company		 Unlisted or
AIM-listed companies		 Very early-stage
companies		 AIM-listed shares
inside an ISA
Income Tax Relief 30% 30% 50% None
Annual Investment Limit £200,000 £1m (£2m for
knowledge-intensive
companies)		 £200,000 £20,000 (ISA
allowance)
Minimum Holding Period for Tax Relief 5 years 3 years 3 years 2 years for IHT relief
(and held until death)
Capital Gains Tax (CGT) Tax-free growth Tax-free growth Tax-free growth No CGT within ISA
Dividend Tax Tax-free Taxable Taxable Tax-free within ISA
Loss Relief No Yes Yes No
IHT Relief (Business Relief) No Yes (if held 2 years +
at death)		 Yes (same rules) Yes (if held 2 years +
at death)
Risk Level High Very High Very High High
Liquidity Limited but tradable Very Limited Very Limited Tradable but volatile
Ideal for experienced investors who… Want tax-free
income and growth		 Want strong tax
incentives +
long-term growth		 Are Comfortable
Backing very Early-stage
Companies		 Want IHT relief with
ISA flexibility

Where investments exceed £2.5 million in Knowledge-Intensive Companies

From 6 April 2026, the rules for Inheritance Tax (IHT) relief on EIS and SEIS investments are changing.

  • 100% IHT relief will apply only to the first £2.5 million of qualifying assets (including private company shares and agricultural property).
  • Any amount above £2.5 million will receive 50% IHT relief, giving an effective IHT rate of 20%.
  • For qualifying EIS/SEIS companies quoted on AIM, the same rule applies — 50% IHT relief above the £2.5 million threshold.

Important information

Tax rules can change, and the exact benefits will depend on your personal circumstances.
This is a high-level summary — the detailed conditions are complex and should be reviewed carefully before investing.

These investments are high risk, and decisions should be based on the quality and suitability of the investment itself, not just the tax relief.

If you’re unsure, you should seek personalised professional advice.

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