Five tax-saving allowances to consider before tax year end
Don't invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong. Take 2 mins to learn more.
Estimated reading time: 2 min
Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.
What are the key risks?
- You could lose all the money you invest
- If the business you invest in fails, you are likely to lose 100% of the money you invested. Most start-up businesses fail.
- You are unlikely to be protected if something goes wrong
- Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker here.
- Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection here.
- You won’t get your money back quickly
- Even if the business you invest in is successful, it may take several years to get your money back. You are unlikely to be able to sell your investment early.
- The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
- If you are investing in a start-up business, you should not expect to get your money back through dividends. Start-up businesses rarely pay these.
- Don’t put all your eggs in one basket
- Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
- A good rule of thumb is not to invest more than 10% of your money in high-risk investments.
- The value of your investment can be reduced
- The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
- These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.
If you are interested in learning more about how to protect yourself, visit the FCA’s website here.
Britain’s tax burden is heading towards a new record high, rising further and faster than previously forecast.
Taxes will rake in £1.6 trillion per year by the start of the next decade, according to the Office for Budget Responsibility (OBR), up from around £1.2 trillion today.
Much of that burden is falling on the ever-growing number of higher- and top-rate taxpayers, caught by tax rises, threshold freezes and allowance cuts.
Against this backdrop, using all available tax-saving allowances will be a priority for many.
If you plan to invest and save tax this tax year (or, in some cases, even claim back tax already paid last year), there is still time. Remember: the end of the tax year is on 5 April, but investment deadlines are earlier.
Moreover, if you are considering investing in Venture Capital Trusts (VCTs), there is an even stronger argument for acting promptly. The next few days are likely the last opportunity to invest and benefit from income tax relief of up to 30%, before it reduces to 20% in the new tax year.
There are detailed conditions and rules you should consider carefully before investing. Decisions should be based on investment merit, not the tax reliefs alone.
Five allowances for this tax year
- VCTs (£200k allowance) – last chance for up to 30% income tax relief and tax-free dividends
- EIS (up to £2 million allowance) – save up to 30% income tax plus defer capital gains made elsewhere
- SEIS (£200k allowance) – save up to 50% income tax and capital gains tax
- SIPP (£60k gross contribution allowance for most people) – up to 45% income tax relief and tax-free growth
- ISA (£20k allowance) – your money can grow free of capital gains and UK income tax
Tax benefits and allowances depend on circumstances.
Important: The information on this website is for experienced investors. It is not a personal recommendation to invest. If you’re unsure, please seek advice. Investments are for the long term. They are high risk and illiquid and can fall as well as rise in value: you could lose all the money you invest.
1. Invest in a VCT – last chance for up to 30% income tax relief and tax-free dividends
VCTs (Venture Capital Trusts) are companies listed on the London Stock Exchange that invest in young, innovative and often privately-owned companies.
When you invest, you could receive:
- Up to 30% income tax relief – save up to £60,000 on your income tax bill when you invest in newly issued VCT shares
- Generous allowance – invest up to £200,000 per tax year
- Tax-free dividends – no need to declare VCT dividends on your tax return and they won’t use up your dividend allowance, which is currently £500. VCT dividends are variable and not guaranteed.
- Tax-free growth – no CGT on gains
Note: From 6 April 2026, the rate of VCT income tax relief is being cut from 30% to 20%.
If you are considering investing in VCTs, these last few days before the end of the tax year could be the last opportunity to receive income tax relief at the higher rate of 30% – a tax break worth up to £60,000 if using the full £200k VCT allowance – and tax-free dividends (dividends are variable and not guaranteed).
2. Invest in EIS – save up to 30% income tax plus defer capital gains made elsewhere
The EIS (Enterprise Investment Scheme) incentivises investment in small and usually privately owned or AIM-quoted companies. You can invest directly in individual companies or in an EIS fund, where the fund manager makes the investment decisions.
When you invest, you could receive:
- Up to 30% income tax relief – up to £3,000 saving on a £10,000 investment
- Carry back – potential to use the income tax relief against a previous year's tax bill
- Very generous allowance – up to £1 million per tax year (or £2 million if at least £1 million is in knowledge-intensive companies)
- Tax-free growth
- Capital gains deferral – defer capital gains from other investments, potentially indefinitely
- Loss relief – offset any future losses against your income
- Inheritance tax relief – potentially pass on your investment free of IHT
3. Invest in SEIS – save up to 50% income tax and capital gains tax
The Seed Enterprise Investment Scheme (SEIS) is designed to complement the EIS. SEIS companies are even smaller and younger than EIS ones, hence riskier. Accordingly, SEIS tax reliefs are more generous.
When you invest, you could receive:
- Up to 50% income tax relief – up to £5,000 saving on a £10,000 investment
- Carry back – potential to use the income tax relief against a previous year’s tax bill
- Generous allowance – £200,000 per tax year
- Tax-free growth
- Up to 50% capital gains reinvestment relief – halve the CGT due on gains from elsewhere
- Loss relief – offset any future losses against your income
- Inheritance tax relief – potentially pass on your investment free of IHT
How to get back tax you’ve already paid with EIS and SEIS carry back
EIS and SEIS investments offer a “carry back” facility. You can elect for all or part of your EIS/SEIS shares acquired in one tax year to be treated as though they had been acquired the previous tax year.
So, for instance, if you invest in an EIS or SEIS offer that plans to deploy your funds in the 2026/27 tax year, you can use the income tax relief (up to 30% with EIS and up to 50% with SEIS):
- to save on your income tax bill for 2026/27
- to get back tax you’ve already paid for 2025/26
You can only do this if you have sufficient EIS or SEIS allowance in the tax year to which you’re carrying back.
Some of the EIS funds, EIS single companies and SEIS funds available on our website are targeting deployment in the new tax year, allowing carry back to the current one – not guaranteed. Tax rules can change and benefits depend on circumstances.
4. Invest in the Private Markets SIPP – receive up to 45% income tax relief
Our Private Markets SIPP is a Self-Invested Personal Pension that allows eligible investors to invest in Private Markets funds from leading managers. This means you could benefit from the diversification and return potential of Private Markets through the tax-efficient structure of a SIPP:
- Up to 45% income tax relief on contributions – SIPP contributions should receive a government top-up of 20% for basic-rate taxpayers, with higher and additional-rate taxpayers able to claim back up to an extra 20% or 25% respectively via their tax return.
- Tax-free growth – within a SIPP, investments grow free from UK income tax and capital gains tax (CGT), and you are usually able to withdraw up to 25% of your SIPP fund tax free at retirement, with the rest taxed as income.
The current annual pension allowance is £60,000, although personal limits can vary (read more on pension tax relief).
Pensions are long-term investments: you cannot normally access your funds before age 55 (57 from 2028). You need to ensure you are eligible to make contributions and that you won’t lose valuable benefits / guarantees or incur excessive fees before transferring. Currently, Wealth Club is working on making retirement options available. In the meantime, to access your SIPP you will have to transfer it to a different provider first. Please consider this if retiring soon.
5. Invest in the Wealth Club Portfolio Service ISA – your money can grow free of capital gains and UK income tax
An ISA (Individual Savings Account) is probably the simplest and most-widely used tax-efficient investment.
- Tax-free growth – with no UK capital gains or income tax to pay on any growth.
- No UK tax on dividends – with no need to monitor or report any dividends.
- No income tax on withdrawals – you can take money out tax free.
Each year you can invest up to £20,000 – if you don't use this by 5 April, you lose it.
If you haven't yet used your ISA allowance this year, you could consider the Wealth Club Portfolio Service ISA.
The Wealth Club Portfolio Service is designed to provide high net worth and sophisticated investors with a best-value, sensible long-term home for their wealth.
You can choose from five portfolios – Conservative, Balanced, Growth, Adventurous Growth and Income – we manage them for you. See portfolios at a glance »
Note: these discretionary managed portfolios are long-term investments which can fall as well as rise in value and returns are not guaranteed. They are for investors happy to make their own investment decisions – they are not personal advice.
Wealth Club aims to make it easier for experienced investors to find information on – and apply for – investments. You should base your investment decision on the offer documents and ensure you have read and fully understand them before investing. The information on this webpage is a marketing communication. It is not advice or a personal or research recommendation to buy, sell or hold any of the investments mentioned, nor does it include any opinion as to the present or future value or price of these investments. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.
Alex Davies
Chief Executive
Alex was a board director at Hargreaves Lansdown, where he worked for 15 years. He was responsible for building Hargreaves Lansdown into the biggest direct-to-consumer SIPP provider in the UK with more than 150,000 clients and over £12 billion under management. He is a keen investor with a portfolio of shares, funds, student property, EIS and VCT investments.