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Enterprise investment schemes: a beginner's guide

There’s no doubt that Isas and pensions are tax-efficient homes for your cash, but there are other investments that can keep the taxman at bay.

Step forward enterprise investment schemes (EISs). They have risen to prominence since the government increased the rate of income tax relief from 20 to 30 per cent, and the annual EIS investment limit for individuals from £500,000 to £1 million. This means investors can offset up to £300,000 of their income tax liability, provided they are due to pay that much in tax in the first place.

How to invest in VCTs: a beginner's guide

Venture capital trusts (VCTs) are collective funds that take stakes in small companies that investors would generally regard as high-risk (with gross assets of no more than £15 million), and that have been hard pressed to access funding in the absence of bank lending over recent years.

VCT shareholders get a variety of generous tax breaks in return for committing their cash to those high-risk investments.