Growth capital—what tax reliefs are available to individual investors?
Growth capital—what tax reliefs are available to individual investors?

The following Tax guidance note provides comprehensive and up to date legal information covering:

  • Growth capital—what tax reliefs are available to individual investors?
  • Seed and venture capital
  • Taxation of investors
  • What are the main tax reliefs available?
  • Table of key reliefs

This Practice Note summarises the key UK tax reliefs available to individuals that provide seed and venture capital to unconnected start-up and early stage companies.

In particular, it:

  1. explains the meaning of seed capital and venture capital, and

  2. summarises the key UK tax reliefs that may be available to third party, individual investors

Investors will usually provide finance through a series of funding rounds and will usually require key individuals involved in the business to participate in the funding rounds by subscribing for shares in the company—for an analysis of the tax issues arising in respect of these shares, see Practice Note: Growth capital—tax on management shareholdings and for information on key tax reliefs that may be available, see Practice Note: Growth capital—tax reliefs available to managers

Seed and venture capital

Unquoted companies require investment at every stage of development, starting from inception through to when the company is fully established and profitable.

Large private equity funds often prefer not to take a risk on start-ups or companies in the early stages of development, preferring instead to invest in businesses that are past the start-up and early stages and are looking to expand and develop; or businesses that are already fully established. Banks can also be reticent to provide funding to businesses with limited operating history and no or few assets on which