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Your client’s key objectives were:
- Investment objective: High growth
- Tax objective: Capital gains tax planning
The results:
Based on the objectives you selected, we’ve suggested tax-efficient investments you might want to consider.
We’ve broken these suggestions down by those that meet:
- Both the investment and tax objective
- The investment objective only
- The tax objective only
| Investment and tax objective | Investment objective | Tax objective |
| Enterprise Investment Scheme | Enterprise Investment Scheme or Business Relief (AIM) | Enterprise Investment Scheme |
Tax-efficient investments
What is the Enterprise Investment Scheme?
Investors in an EIS portfolio own shares directly in a portfolio of early-stage companies. EIS typically appeals to experienced investors who want to back companies with high growth potential. Investors can claim generous tax reliefs because of the risks involved, which include loss relief when an underlying investment returns less than they invested.
What are the reasons to invest?
High growth potential
Access to high-risk opportunities with the potential for high growth.
Tax reliefs
Reliefs include upfront income tax relief, tax-free growth, loss relief, capital gains tax deferral, and inheritance tax relief.
Diversification
Access early-stage companies investors wouldn’t hold in a mainstream investment.
Points to consider
An EIS portfolio invests in small early-stage companies. The combination of tax reliefs available makes an EIS-qualifying portfolio a compelling structure through which to target high growth.
Investors must hold shares for a minimum of three years to keep certain tax reliefs claimed and should be prepared to hold their shares for significantly longer to allow time for growth and liquidity.
What is Business Relief?
Business Relief (BR) is an established relief that allows certain investments to be left to loved ones free from inheritance tax. Compared to options like gifting, it can offer a faster solution to inheritance tax and doesn’t put capital permanently out of reach.
What are the reasons to invest?
Fast inheritance tax exemption
BR-qualifying investments can be free from inheritance tax after just two years.
Access and control
Investors retain access to their wealth and can request to sell their shares at any time, subject to liquidity.
Growth
BR-qualifying investments give investors the opportunity to grow their capital, with a range of products available to suit different appetites.
Points to consider
An inheritance tax service that invests in unquoted Business Relief-qualifying companies selects businesses that are not listed on any stock exchange. These typically target a steady, predictable return.
AIM inheritance tax services invest in Business Relief-qualifying companies that are listed on the Alternative Investment Market (AIM) market. They offer the potential for high growth.
Risks to bear in mind
Capital at risk
The value of an investment, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest.
Volatility and liquidity
Smaller and unquoted company shares could fall or rise in value more than other shares listed on the main market of the London Stock Exchange. They may also be harder to sell.
Qualification status
Tax reliefs depend on portfolio companies maintaining their BR- or EIS-qualifying status.
Tax treatment
Tax treatment depends on individual circumstances and could change in the future.
Enterprise Investment Schemes from Octopus
Octopus Ventures Knowledge Intensive EIS Fund
Octopus Ventures EIS Service
Business Relief-qualifying investments from Octopus
Octopus AIM Inheritance Tax Service
Helping investors pass on more of their wealth, while targeting growth by investing in companies listed on the Alternative Investment Market (AIM).
Octopus AIM Inheritance Tax ISA
Investors with large ISA pots can plan for inheritance tax while keeping their wealth in an ISA wrapper.
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