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.
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Capital Gains Tax
Alyssa Peterson
· 3 min read
· Updated on

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What are the capital gains tax rates in the UK?

Currently, just 2 different rates of capital gains tax (CGT) exist in the UK: 18% and 24%. The rate of CGT that you may be subject to depends on the income tax band you fall into, as well as the type of asset on which your capital gain was made.

The capital gains tax rates in the UK are not currently scheduled to change over the coming years (unlike the CGT threshold), but the individual CGT rates you pay could differ if the rate of income tax you pay changes.

The UK CGT rates as of the 2024/25 tax year are as follows:

  • 18% on total chargeable assets (and also 18% for residential property) if your overall annual income is £50,270 or below
  • 24% on total chargeable assets (and 24% too for residential property) if your overall annual income is £50,271 or above

These rates are scheduled to remain for the 2025/26 tax year, but a further increase hasn't been ruled out.

Tax bracket

     Income range CGT rate on assets CGT rate on property
Basic rate     312,571 to £50,270 18% 18%
Higher rate     £50,721 to 125,139 24% 24%
Additional rate     Over £125,140 24% 24%

For example: If you bought a second residential property for £200,000 and later sold it for £350,000, realising a gain of £150,000, this could attract a capital gains tax liability of £36,000 (if you are a higher or additional rate taxpayer, and your CGT allowance for the tax year has already been fully utilised).

If you are a basic rate income taxpayer, this same gain could result in a CGT liability of £27,000 (again, provided that your CGT threshold for the tax year has already been used fully).

 

Which assets can be subject to capital gains tax?

Capital gains tax can be due on any profit you realise from disposing of a chargeable asset.

Disposing of an asset can be defined as selling it, giving it away as a gift (to anyone other than your spouse or a charity), swapping it for something else, or receiving compensation for it (like an insurance payout if it has been lost or destroyed).

The following assets are classed as chargeable assets and could attract a CGT bill when disposed of:

  • Property that is not your primary residence
  • Your main property – only if it’s larger than 5,000 square metres (just over one acre), you have let it out, or used part of it exclusively for business purposes
  • Individual possessions worth more than £6,000 (excluding your car)
  • Business assets
  • Some types of cryptocurrency
  • Investments that aren’t held in tax-efficient wrappers

The capital gains tax allowance: what is it?

When calculating your annual capital gains from disposing of chargeable assets, it’s important to account for the capital gains tax allowance (also known as the annual exempt amount, or AEA) – the amount you are permitted to earn per year from capital gains, free of tax. 

You only need to pay capital gains tax if your overall gains for the tax year (after deducting any losses and applying any reliefs) are above the annual exempt amount.

  • In the 2019/20 tax year, the AEA was £12,000
  • This rose to £12,300 in the 2020/21 tax year, and remained at this level until 2022/23
  • As of the 2023/24 tax year, the AEA is scheduled to fall to £6,000
  • As of the 2024/25 tax year, the allowance is set to halve to £3,000

For example: If you’re a higher rate income taxpayer and you sold investment shares (not held within any tax-efficient wrappers) worth £25,000 in the 2024/25 tax year – and hadn’t used up any of your CGT allowance before this sale – a CGT liability of £5,280 would arise (£25,000 - £3000 AEA equals a taxable gain of £22,000, taxed at 24%).

Compared with this, if the exact same scenario occurred in the 2024/25 tax year, the higher rate income taxpayer could face a CGT bill of £4,400 (£25,000 - £3,000 AEA equals a taxable gain of £22,000, taxed at 20%).

To estimate your CGT bill, we have a capital gains tax calculator that will take care of allowances and current rates based on your income. 

So, with the capital gains tax-free allowance set to fall significantly within a short time frame, maximising tax-efficiency could prove crucial to retain as much of wealth as possible, especially for high-net-worth individuals and experienced investors looking for ways to reduce or even avoid certain capital gains tax bills entirely.

 

Record capital gains tax collected in the UK in 2022 

As announced by Chancellor Jeremy Hunt in the Autumn Statement 2022, many tax bands and thresholds are set to change, and some are to be frozen for an extended period. This fiscal policy is impacting capital gains tax, as well as income tax, National Insurance, inheritance tax and dividends tax. 

Even before these announcements have fully come into force, the UK’s CGT revenue reached £15 billion in the year to October 31 2022  – an increase of 27% in just one year. This is the first time that UK CGT receipts have exceeded £15 billion, further emphasising the need for high-net-worth individuals and sophisticated investors, in particular, to organise their assets in a tax-efficient manner, enabling more of their wealth to be retained and eventually passed on to their beneficiaries.

These circumstances have seen the potential benefits of tax-efficient investment vehicles such as the EIS and SEIS increase considerably. Especially with the SEIS rules being made more generous and the EIS sunset clause being extended, investors can continue to make use of these schemes, aiming to counteract the added tax strain that is likely to be felt in the near future. 

Free guide download to capital gains tax
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