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Your client’s key objectives were:

  • Investment objective: Income
  • Tax objective: Inheritance tax planning

The results:

Unfortunately, there isn’t one solution that could meet both your client’s key tax and investment objectives. 

However, we’ve highlighted some options to consider that meet your client’s tax and investment objectives when taken in isolation. You may wish to research these opportunities and consider whether using a combination of these could support your client’s financial planning.

Investment and tax objectiveInvestment objectiveTax objective
No solutionVenture Capital TrustsBusiness Relief (unquoted or AIM) or Enterprise Investment Scheme

Tax-efficient investments

What are Venture Capital Trusts?

Venture Capital Trusts invest in a diversified portfolio of early-stage companies. Investors benefit from the VCT owning small stakes in a large number of companies across different sectors. 

What are the reasons to invest?

Income tax relief 

Investors can claim upfront income tax relief equal to 30% of their investment up to the first £200,000 invested each tax year. 

Tax-free dividends 

The tax-free dividends paid by a VCT can create an additional income. 


VCTs give investors access to smaller companies they may not otherwise hold. 

Points to consider

VCTs were created by the UK government to fund the growth of early-stage companies by encouraging investment into UK high growth small businesses. They’re a long-term investment and clients should be prepared to hold their shares for a minimum of five years, otherwise any income tax relief claimed will need to be repaid. 

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

VCT, 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 VCTs maintaining their qualifying status or portfolio companies maintaining their BR- or EIS-qualifying status.

Tax treatment

Tax treatment depends on individual circumstances and could change in the future.

VCTs from Octopus

Enterprise Investment Schemes from Octopus

Business Relief-qualifying investments from Octopus

Octopus Inheritance Tax Service

A service targeting a steady, predictable return. It has been helping investors pass on more of their wealth since 2007.

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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Please read: We do not offer investment or tax advice, and we always recommend investors talk to a financial adviser before making investment decisions. This advertisement is not a prospectus. Investors should only subscribe for shares on the basis of information contained in the prospectus and Key Information Documents (KID), which are available in the document section of this page.