Tax-efficient investments

explained

Learn more about tax-efficient investing and how we can help.

What are tax-efficient investments?

Tax-efficient investments can help you plan for your financial goals, including retirement and passing more of your wealth to loved ones.

These investment opportunities allow you to claim certain tax benefits because you are investing into qualifying companies or investment vehicles.

However, because of their risk profile, the tax-efficient investments we offer aren’t suitable for everyone. We always recommend you seek financial advice before deciding to invest.

What are tax-efficient investments?

You’ll be familiar with pensions and ISAs. These let a client invest up to a certain amount while benefiting from tax relief. Investors can use their annual ISA allowance, for example, and expect to pay no tax on any growth or income.

The principles of the tax-efficient investments we specialise in are similar. They can help investors meet their financial goals, including passing more of their wealth to loved ones. However, because of their risk profile, they won’t be suitable for everyone.

Why are tax-efficient investments important?

Venture Capital Trusts, the Enterprise Investment Scheme, and investments that qualify for Business Property Relief all offer generous tax reliefs.


These reliefs could help you with your tax planning, and they compensate for some of the additional risks of investing in unquoted companies, or those listed on the Alternative Investment Market (AIM). Without this support, smaller companies wouldn’t be able to grow as quickly.

Tax reliefs

Investors can claim tax reliefs to support their financial planning, for example by reducing an income tax liability, creating a tax-free income stream, or helping to plan for inheritance tax.

Opportunity for investment growth

Tax-efficient investments offer the potential to grow your capital, and depending on the specific investment, can meet a range of growth appetites.

Supporting smaller companies

Smaller companies are the lifeblood of the UK economy. Tax-efficient investments provide many of these businesses with the capital they need to grow rapidly, create jobs and stimulate the economy.

Why are tax-efficient investments important?

Venture Capital Trusts, the Enterprise Investment Scheme, and investments that qualify for Business Property Relief all offer generous tax reliefs.

These reliefs can help investors with their tax planning and they compensate for some of the additional risks of investing in unquoted companies, or those listed on the Alternative Investment Market (AIM). Without this support, smaller companies wouldn’t be able to grow as quickly.

Tax reliefs

Investors can claim tax reliefs to support their financial planning, for example by reducing an income tax liability, creating a tax-free income stream, or helping to plan for inheritance tax.

Opportunity for investment growth

Tax-efficient investments offer the potential for growth and, depending on the specific investment, can meet the needs of a variety of investors.

Supporting smaller companies

Smaller companies are the lifeblood of the UK economy. Tax-efficient investments provide many of these businesses with the capital they need to grow rapidly, create jobs and stimulate the economy.

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 BPR- or EIS-qualifying status.

Tax treatment

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

Our tax-efficient investments

What is Business Property Relief?

Business Property Relief (BPR) 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

BPR-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.

Growth

BPR-qualifying investments give investors the opportunity to grow their capital, with a range of products available to suit different appetites.

What is Business Property Relief?

Business Property Relief (BPR) 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

BPR-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.

Growth

BPR-qualifying investments give investors the opportunity to grow their capital, with a range of products available to suit different appetites.

“A growing number of investors could benefit from thinking outside the box when it comes to financial planning. Looking at ways to invest tax-efficiently could make a real difference.”

Jessica Franks, Head of Retail Investment Products

Want to learn more?

Our guides

We have several guides to help you get to grips with tax-efficient investments, inheritance tax and much more.

Untangling inheritance tax guide
Read guide
Guide to the Enterprise Investment Scheme
Read guide
Guide to Venture Capital Trusts
Read guide

Clients who could benefit from tax-efficient investments

Tax-efficient investments could help a variety of clients. Watch or read our planning scenarios to help you recommend effective planning strategies.

More planning scenarios

Explore all our client planning scenarios to spot more opportunities to help your clients.

Want to learn?

Our guides

We have several guides to help you get to grips with tax-efficient investments, inheritance tax and much more.

Untangling inheritance tax guide
Read guide
Guide to the Enterprise Investment Scheme
Read guide
Guide to Venture Capital Trusts
Read guide