Our most tax efficient investment options

A deep dive into the tax benefits of our investments

Tax planning can be a complex task, but careful tax planning can save you 000’s and often investors start thinking about these things too late down the line so we wanted to shine a light on some of the tax benefits of our products to help you build a tax efficient portfolio. 

Please note that we are not tax advisors and we recommend all customers speak to a tax adviser as benefits will be subject to your individual tax jurisdiction and circumstances. The below information is based on UK tax residents.

Current UK Tax Rates

There are 3 key tax areas that customers tend take a hit on when investing. The rates of tax change each year but here is a summary of current rates in the UK. 

1. Income tax

2. Inheritance tax – 40%

3. Capital Gains tax – 20% if you are in the higher rate or additional rate band.

A summary of tax benefits across our products

The table below summarises which areas of tax our products can offer relief

A deep dive into the tax benefits across products

EIS Fund/ Startup deals

The below tax benefits apply to any of our EIS/ SEIS labelled startup deals/ funds

• Income tax relief of 30%
• Tax-free capital gains.
• The ability to defer tax on capital gains from elsewhere (an investor can defer paying CGT on the proceeds of a secondary property, for example, if those funds were invested directly into an EIS investment)
• Exemption from inheritance tax (provided the investment has been held for two years prior)
• The potential to claim additional tax relief (up to the value of 70pc of the original investment) if the investment is sold at an effective loss
  

Some of the restrictions

As with any investment there are a number of restrictions that you should be aware of as they will prevent you from claiming the tax benefits;

• You must be a UK taxpayer to benefit from EIS
• The maximum eligible investment is £1m per annum (or £2m for funds focusing on ‘knowledge intensive companies’)
• At the time of investment, you cannot be an employee of the company
• You cannot hold more than 30% of the company’s overall shares

Rasmala

no tax paid on dividend if you invest via a LTD company

Forestry fund

• Inheritance tax: 100% relief after two years due to Business Property Relief, provided you still hold the investment on death.
• Income tax: there should be no liability to income tax on timber revenue 

You can find out more information on these products and invest via the live deals page

Other ways to minimise your tax bill

Investing via an entity

All of our opportunities allow you to invest via an entity. This means you will only be subject to Corporation Tax (currently 19% if profits are below £50k and 26% if profits are over £250k) instead of Income Tax on profits. In order to do this you can just click invest now on any deal/ fund and will have the option to add your entity details. Note – this feature is not available yet in the mobile app.

Set up a trust based will

If you are looking to reduce the inheritance tax for your predecessors and you have over £325k in assets you should look at getting a trust based will

Live outside the UK?

Some of these benefits may also apply to you, but we recommend speaking to a tax advisor to understand how they impact your tax jurisdiction

We hope that the above information has helped you to start thinking about how you can get the most out of your portfolio – getting this right can have huge implications on the net amount received from your portfolio after tax. As always if you do have any further questions regarding any of these benefits you can reach out to our team via the contact us page.