Tax-efficient funds: SEIS, EIS, SITR & VCTs
Invest into funds which invest into young and fast growing companies focusing on solving environmental and social problems, while benefiting from their tax-efficient status
Last Updated: January 2021
If you have maxed out your ISA and pension contributions, many investors look at tax-efficient investment funds. It is important to note, however, that these are often for 'sophisticated investors only' as the risks are often higher than other forms of investment. It is therefore recommended that you consult with a financial advisor to look at these types of investments.
To help encourage investors to invest into small and fledgling companies in the UK, the government has a number of schemes which carry generous tax incentives. These include Venture Capital Trusts (VCTs), the Seed Enterprise Investment Scheme (SEIS), Enterprise Investment Scheme, Social Investment Tax Relief (SITR) and Community Investment Tax Relief (CITR).
The main thing about these tax-efficient schemes is that investors can receive tax relief on investing into such companies. For EIS and VCTs, for example, you can receive 30% tax relief on the amount you invest. This means that of the amount you invest, 30% of that can be used to offset your tax bill. More detail on these schemes can be found here: EIS, SEIS and VCT, and SITR and CITR.
There are many funds that invest into these early stage companies, seeking to grow them like any investment, and also to take advantage of the tax benefits that exist. Typically, these investment funds are either VCTs, SEIS or EIS funds, and invest into up to 10 companies over a period of 5+ years. They are only open for 'sophisticated investors' and often have minimum investment amounts from £10,000.
Below are the tax-advantaged investment funds that have a sustainable/ ethical focus and which are open for investment.