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Information for newcomers

Sophisticated and complex high-risk tax-sensitive investments in small companies: handle with care
SpecialSaver2
Posts: 16
Joined: November 23rd, 2016, 4:24 am

Information for newcomers

#8009

Postby SpecialSaver2 » November 23rd, 2016, 4:49 am

Information for newcomers on VCTs, EIS, SEIS investments

I am splitting up this post into several posts as there is a limit of 3 URLs per post...

Info on VCTs

I would start with this page from the Money Advice Service:
https://www.moneyadviceservice.org.uk/e ... nture-ca...

There is also this article from Monevator:
http://monevator.com/the-risks-of-ventu ... usts-vct...

SpecialSaver2
Posts: 16
Joined: November 23rd, 2016, 4:24 am

Re: Information for newcomers

#8010

Postby SpecialSaver2 » November 23rd, 2016, 4:50 am


SpecialSaver2
Posts: 16
Joined: November 23rd, 2016, 4:24 am

Re: Information for newcomers

#8011

Postby SpecialSaver2 » November 23rd, 2016, 4:50 am

Once you have mastered the basics...

To find out some broker research and opinions for free on current offers then download the factsheets on individual offers from the BestInvest and Hargreaves-Lansdown websites:
http://www.bestinvest.co.uk/investment- ... t-launches
http://www.hl.co.uk/investment-services ... vct-offers
Last edited by SpecialSaver2 on November 23rd, 2016, 4:58 am, edited 1 time in total.

SpecialSaver2
Posts: 16
Joined: November 23rd, 2016, 4:24 am

Re: Information for newcomers

#8012

Postby SpecialSaver2 » November 23rd, 2016, 4:51 am

There are also paid-for subscription services for individual offers such as:
https://www.taxefficientreview.com/
http://www.taxshelterreport.co.uk/

Some VCT providers will pay for a re-print of one of those reports for investors (e.g. ProVen have paid for their review in Tax Efficient Review to be put on their website for investors to download for free): http://www.provenvcts.co.uk/

SpecialSaver2
Posts: 16
Joined: November 23rd, 2016, 4:24 am

Re: Information for newcomers

#8013

Postby SpecialSaver2 » November 23rd, 2016, 4:52 am

EIS and SEIS

Basic information:

HMRC page on EIS tax reliefs: http://www.hmrc.gov.uk/eis/index.htm
HMRC page on SEIS tax reliefs: http://www.hmrc.gov.uk/seedeis/index.htm
Monevator introduction to EIS and SEIS: http://monevator.com/what-are-enterpris ... t-schemes/
Last edited by SpecialSaver2 on November 23rd, 2016, 4:55 am, edited 1 time in total.

SpecialSaver2
Posts: 16
Joined: November 23rd, 2016, 4:24 am

Re: Information for newcomers

#8014

Postby SpecialSaver2 » November 23rd, 2016, 4:53 am

There are no free of charge broker reviews as far as I can see. It is also very difficult to find any past performance data for portfolio providers (unlike VCT companies).

The paid-for subscription services cover EIS portfolio and individual company offers.
https://www.taxefficientreview.com/
http://www.taxshelterreport.co.uk/

Some EIS providers will pay for a re-print of one of those reports for investors to appear on their own website.

Hopefully from the information above, you will see that investing using these schemes is generally riskier than VCTs and there is virtually no liquidity however you do get much better tax breaks in return.

From here on, I will use (S)EIS to signify "EIS and / or SEIS."

Now... as for the different ways to invest using (S)EIS tax breaks...

SpecialSaver2
Posts: 16
Joined: November 23rd, 2016, 4:24 am

Re: Information for newcomers

#8015

Postby SpecialSaver2 » November 23rd, 2016, 5:00 am

1. (S)EIS Portfolios / Funds
These are sourced by a venture capital company that do everything for you, for a fee.
Minimum investment: Usually £10,000 or £25,000 although there is the occasional one for £5,000
Pros: No effort required on the part of the investor, the manager may help provide valuable guidance and support services for the investee company
Cons: Huge costs for both the investor and the investee company
More information:
The website of discount broker Clubfinance has information on the biggest offers and they offer a discount on these: http://www.clubfinance.co.uk/enterprise ... chemes.php
Hargreaves-Lansdown no longer offer EIS investments.
The paid-for subscription review websites both have more extensive and free lists of currently open offers and how much money each offer has raised. The TER website also has a breakdown by sector and track record.
http://www.taxshelterreport.co.uk/
https://www.taxefficientreview.com/

SpecialSaver2
Posts: 16
Joined: November 23rd, 2016, 4:24 am

Re: Information for newcomers

#8016

Postby SpecialSaver2 » November 23rd, 2016, 5:01 am

2. (S)EIS Individual Company
Generally pubs, films or renewable energy companies.
Minimum investment: Usually £10,000 or £25,000 although there is the occasional one for £5,000
Pros: Can be cheaper with less fees
Cons: More risk investing in a single company
More information: same websites as above, plus if you are super-wealthy then there are companies that can introduce you such as http://www.iwcapital.co.uk/our-services.php
Also, http://www.energy4all.co.uk/ does renewable energy investments from £250 if you do not mind having taxable interest payments.

SpecialSaver2
Posts: 16
Joined: November 23rd, 2016, 4:24 am

Re: Information for newcomers

#8017

Postby SpecialSaver2 » November 23rd, 2016, 5:01 am

3. New AIM Shares
This involves buying shares in an existing AIM-listed company in the hope that they make an offer for new shares that is eligible for EIS tax relief.
Minimum investment: none but I figure you will want to invest a few thousand pounds to make it worthwhile given the cost of buying shares in AIM companies in certificate form beforehand - no point buying £100 worth of shares!
Pros: The only option that I am aware of where you have liquidity and therefore also the option of selling the shares as soon as the minimum period for tax relief is over. Another advantage is that the new shares are usually offered at a discount to the current share price, so you get that discount as well as the tax relief.
Cons: Most companies will only offer new shares to people who are on the shareholder's register at the time of the announcement, so you have to guess which companies are going to need to fundraise in the near future

SpecialSaver2
Posts: 16
Joined: November 23rd, 2016, 4:24 am

Re: Information for newcomers

#8018

Postby SpecialSaver2 » November 23rd, 2016, 5:02 am

4. Crowdfunding
This involves clubbing together with other investors online.
Minimum investment: £10
Pros: Very little effort required, low minimum investment and you have control over which companies you invest in
Cons: Valuations can be difficult to judge, you are dependent on the crowdfunding platform to do due diligence, one of the major crowdfunding platforms will sell you shares without voting and pre-emption rights which give you less protection than other investors
More information: The most popular crowdfunding sites are http://www.seedrs.com, http://www.syndicateroom.com/, http://www.crowdcube.com

SpecialSaver2
Posts: 16
Joined: November 23rd, 2016, 4:24 am

Re: Information for newcomers

#8019

Postby SpecialSaver2 » November 23rd, 2016, 5:03 am

5. Angel Networks
This involves groups of experienced investors directly investing in investee companies following written proposals and verbal pitches from entrepreneurs followed by a period of due diligence.
Minimum investment: Usually around £10,000
Pros: You get to meet the entrepreneurs, you can do your own due diligence and use your own professional expertise to choose a good company and help nurture it (or join a syndicate where you trust the lead investor(s) to do this on your behalf)
Cons: Can be a lot of effort and requires some experience as well as ensuring you have a good legal agreement, some angel networks will charge you an annual fee and they take a fee from the investee company too
More information: http://www.ukbusinessangelsassociation.org.uk/investors

SpecialSaver2
Posts: 16
Joined: November 23rd, 2016, 4:24 am

Re: Information for newcomers

#8020

Postby SpecialSaver2 » November 23rd, 2016, 5:03 am

6. Friends and family
Investing in a new business created by your friends or family if it is eligible for (S)EIS relief.
Minimum investment: Whatever you wish
Pros: Helping out friends and family, no fees paid to management companies/crowdfunding fees/angel network fees
Cons: I would not want to have any disagreements with friends and family over money or how the business is run
More information: N/A

SpecialSaver2
Posts: 16
Joined: November 23rd, 2016, 4:24 am

Re: Information for newcomers

#8021

Postby SpecialSaver2 » November 23rd, 2016, 5:06 am

Sorry, I cannot now edit the first few threads of this post but here are some missing links from those posts...

https://www.moneyadviceservice.org.uk/e ... tal-trusts
http://www.clubfinance.co.uk/venture-capital-trust.php
http://www.hl.co.uk/investment-services ... t-is-a-vct


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