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.
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Risk Summary

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
  • Most investments are shares in start-up businesses or bonds issued by them. Investors in these shares or bonds often lose 100% of the money they invested, as most start-up businesses fail.
  • Checks on the businesses you are investing in, such as how well they are expected to perform, may not have been carried out by the platform you are investing through. You should do your own research before investing.

You won't get your money back quickly

  • Even if the business you invest in is successful, it will likely take several years to get your money back.
  • 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.
  • Start-up businesses very rarely pay you back through dividends. You should not expect to get your money back this way.
  • Some platforms may give you the opportunity to sell your investment early through a 'secondary market' or 'bulletin board', but there is no guarantee you will find a buyer at the price you are willing to sell.

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. Learn more here.

The value of your investment can be reduced

  • If your investment is shares, 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.

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.
  • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated platform, FOS may be able to consider it. Learn more about FOS protection here.

If you are interested in learning more about how to protect yourself, visit the FCA's website here.

For further information about investment-based crowdfunding, visit the crowdfunding section of the FCA's website here.
October Budget
Insights
Matthew Robineau
· 3 min read
· Updated on

The October 2024 Budget: What It Means for Investors

On Wednesday 30th October, the Chancellor unveiled the Autumn Budget, setting the stage for the UK’s financial outlook in the coming year. With various changes that could significantly impact investors, it's crucial to dissect the implications of these fiscal decisions.


In this blog, we’ll focus first on the key changes affecting investors, touch on other notable budget points, and conclude with a strategic overview of how to navigate this increasingly high-tax environment.

Key Changes Affecting Investors in the October 2024 Budget

The October 2024 Budget introduces several critical tax adjustments impacting investors, from capital gains and income tax to inheritance tax, signalling an increased need for strategic financial planning.

Capital Gains Tax Changes

The October Budget saw increased capital gains tax (CGT) rates, effective from 30 October 2024. Main rates have been adjusted to 18% for standard rate taxpayers and 24% for higher rate taxpayers, up from the previous 10% and 20%. Notably, residential property rates remain unchanged, providing some respite for landlords, though for trustees, the main CGT rate lifts from 20% to 24%.

The rate for business asset disposal relief (BADR) - previously known as Entrepreneurs' Relief - and investors’ relief will also increase to 14% in April 2025, then again to 18% in April 2026. While the lifetime limit for BADR remains at £1,000,000, the investor's relief limit has been significantly cut from £10,000,000 to £1,000,000, representing a massive 90% decrease. 

Income Tax

Although the chancellor avoided increasing income tax rates directly, the freeze on personal allowances causes fiscal drag and essentially acts as a stealth tax. With the thresholds remaining static, rising wages will push more income into higher tax brackets, reducing disposable income for many investors.

Furthermore, for those individuals in fund manager roles, the tax rate on carried interest will rise to 32% from 6th April 2025, with additional reforms in April 2026 that will potentially classify carried interest as trading profits, resulting in an effective tax rate of 34.075%.

Inheritance Tax (IHT) Changes

The inheritance tax (IHT) threshold remains fixed at £325,000 until April 2030, complemented by a residential nil-rate band of up to £175,000, allowing a total tax-free allowance of £500,000 (or £1 million for couples). Once again, the freezing of these thresholds will undoubtedly increase public revenue as property values increase and more estates become liable for IHT, underscoring the importance of proactive estate planning.

From April 2026, changes will impact business and agricultural relief, maintaining 100% relief on the first £1 million of combined property, but now 50% relief on amounts exceeding this threshold. The government will also reduce the rate of business property relief available to 50% for shares designated as unlisted on markets of recognised stock exchanges.

A pivotal change for pensions is the removal of the IHT exemption starting 6 April 2027. Now, if an individual passes away at, or after, 75, withdrawals by beneficiaries will incur income tax at their marginal rate, potentially leading to taxes of up to 67%.

Other Notable Changes from the October 2024 Budget

Beyond the implications for investors, the October Budget addressed several other pivotal areas:

  • NHS and Education Funding Enhancements: the government has pledged substantial increases in funding for healthcare and education, aiming to elevate public service standards. While this commitment promises significant improvements, it may also necessitate additional tax adjustments in the future to sustain these investments.

  • National Wealth Fund Initiatives: The budget also spoke of the National Wealth Fund, targeting £70 billion in investments to boost infrastructure and economic growth. Led by Finance Minister Rachel Reeves, the fund focuses on future industries like gigafactories and green hydrogen, supporting the clean energy transition. With a flexible approach and collaboration with industry partners, it aims to accelerate growth and unlock opportunities for investors primarily in transformative sectors.

  • Support for Business and R&D: new incentives have been outlined for businesses engaged in research and development, particularly within the technology and sustainability sectors. These incentives are poised to create lucrative investment opportunities for those eager to back cutting-edge innovations whilst driving progress in our most transformative industries.

Final Note

Strategic Investment Planning in a Higher-Tax Environment
As the Budget reflects a notable trend towards increased taxes and more stringent fiscal measures, the importance of strategic investment planning has never been more important. For investors, particularly those impacted by the recent changes, adapting your investment strategy is crucial.

The Enterprise Investment Scheme (EIS) more than ever stands out as an effective way to address some of these tax increases. Offering income tax relief and CGT-free growth, the EIS provides significant advantages in a high-tax environment. The ability to defer capital gains tax further enhances its appeal, making it an essential consideration for sophisticated investors seeking to optimise their portfolios.

For individual investors, the EIS has likely ascended the list of investment wrappers worth considering thanks to the recent Budget. With CGT-free growth becoming more appealing and CGT deferral gaining value in a higher-tax world, the scheme offers compelling benefits. Coupled with the 30% upfront income tax relief, EIS presents a strategic opportunity for investors to explore. Should the Budget stimulate significant inflows, it could also benefit British start-ups, helping them secure additional funding to drive further growth. 

As we move forward from this Budget, a proactive approach to investment strategy—especially incorporating EIS—could be essential for safeguarding your financial future and maximising the tax efficiency of your investment portfolio.

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