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Investing & tax
relief: what you
need to know
Learn when and how you can reduce your tax bill by understanding where relief applies to your investments.
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What is tax relief?
Tax relief is a reduction in the amount of tax you need to pay the government in income tax and/or from Capital Gains Tax (CGT). Income tax is charged on most types of income, the most common being your salary. CGT is the tax you pay on the profit you make from selling assets such as property or shares.
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Reduce tax bills
Tax relief offers the opportunity to reduce the amount of income tax your pay today as well as capital gains on any return.
Multiple ways to take advantage
Keep an eye out for opportunities that offer tax relief, including EIS, SEIS and VCT opportunities.
Easy to claim
Claiming tax relief through your tax return is easy, whether doing it yourself or with help from your accountant.
How and when can investing reduce my tax bill?
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When it comes to investing, tax relief mainly relates to the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS). Both schemes were introduced by the UK government to help smaller, higher-risk trading companies raise finance by offering a range of tax relief to investors who purchase new shares in those companies.
What is the Enterprise Investment
Scheme?
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Under the EIS, a company can raise up to £5 million a year or £12-million in the company’s lifetime. The scheme helps smaller businesses fund their growth, boost their credibility and gain a wider pool of investors.
For investors it’s a tax-efficient way to invest in eligible UK companies. You can invest up to £1-million in any tax year and receive 30% tax relief, as long as you stay invested for at least three years
An additional £1-million is eligible for the same 30% relief for investment in “knowledge-intensive” companies..
What is the Seed Enterprise Investment Scheme?
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The SEIS was introduced by the UK Government following the success of the EIS scheme. It targets younger, smaller companies and is designed to encourage seed investment in them.
Investors, including directors, can receive initial tax relief of 50% on investments up to £100,000 and Capital Gains Tax (CGT) exemption for half of any gain on the SEIS shares if they are reinvested into another SEIS-eligible company.
Venture Capital Trusts & tax relief
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Venture Capital Trusts (VCTs) are investment funds, typically listed on stock exchanges, that provide
investors with a diversified portfolio of small, early-stage companies.
Investors in VCTs can enjoy tax benefits, such as income tax relief on their VCT investment and tax-free dividends. If you choose to sell your VCT shares and make a profit, the money you make will not be subject to capital gains tax.
Risk warning
Investing in start-ups and early-stage businesses involves risks, including illiquidity, lack of dividends, loss of investment and dilution, and it should be done only as part of a diversified portfolio. FUNDH3R is targeted exclusively at investors who are sufficiently sophisticated to understand these risks and make their own investment decisions. You will only be able to invest via FUNDH3R once you are registered as sufficiently sophisticated. Please click here to read the full Risk Warning.
Quva, our wealth management platform is authorised and regulated by the Financial Conduct Authority (FCA) . This page has been approved by FUNDH3R. Pitches for investment are not offers to the public and investments can only be made by members of FUNDH3R. If this page contains details of historical performance, investors should be aware that past performance is not a reliable indicator of future results. Further restrictions and FUNDH3R's limitation of liability are set out in the Investor Terms and Conditions.
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Please seek independent advice as required as neither The Female Network nor FUNDH3R give investment or tax advice.