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.
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.

UK property
Industry Insights
Inheritance tax

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Rising property wealth set to boost Treasury's inheritance tax receipts by £5.4 billion: what might this mean for you?

In some parts of the UK, homes account for half of the inheritance tax (IHT) paid on the average estate, and with property prices in the UK rising by approximately 22% between 2019 and 2022, thousands more families are set to face an inheritance tax bill following the Chancellor’s Autumn Statement. 

For those estates that already sit above the IHT threshold, these changes could mean an even greater sum of wealth will be payable to HMRC upon the estate-holder’s passing.

Firstly, to add some context: if all of your property, investments and possessions (known as your estate) equal more than £325,000, your loved ones could be subject to inheritance tax of 40% upon your passing. This figure is referred to as the inheritance tax nil-rate band, and if your estate does not exceed this allowance, your beneficiaries will not be subject to inheritance tax on any assets they inherit from you.

The nil-rate band has remained at £325,000 since 2009, and in 2022’s Autumn Statement it was announced by Chancellor Jeremy Hunt to stay frozen at this level until 2028. 

Interestingly, investment firm AJ Bell calculated that, if the nil-rate band were to increase in line with actual and projected inflation rates between 2010 and 2028, it would stand at £502,000. This reveals a discrepancy of £177,000 between the actual IHT nil-rate band in 2028, and the nil-rate band in which inflation is accounted for.

When considered alongside average property prices in the UK, which have risen from £157,000 to £292,000 between 2009 and 2022, the data shows that house-price inflation has increasingly eroded the value provided by the nil-rate band. 

To illustrate this, in 2009, the average UK house price would use up 48% of the nil-rate band, whereas in 2022, the average UK house price would use up 90% of the nil-rate band.

As a result of this, many more families in the UK are likely to face an inheritance tax bill upon the death of a loved one, and those already paying IHT may face a greater proportion of their wealth being taxed due to the freezing of the threshold. Due to these factors, the Treasury is anticipating an additional £5.4 billion to be raised, solely from inheritance tax, across the six-years between 2022 and 2028.

To fully understand this trend and how you could mitigate the level of inheritance tax your loved ones may have to pay, a number of key topics and strategies could be explored, from inheritance tax efficient investments to making a will.


Property wealth accounts for a substantial proportion of inheritance tax revenue

Highlighted by data obtained in a Freedom of Information request, in the South East of England, property accounts for 39% of inheritance tax paid by the average estate subject to IHT, with this figure rising to 50% of inheritance tax paid by the average taxable estate in London. 

In the rest of mainland UK, property wealth makes up around 25% of inheritance tax paid on the average estate that attracts an IHT bill, while in Northern Ireland – where the fewest estates are liable – property accounts for 17% of the entire estate, on average.

These figures show that a huge proportion of IHT collected by the UK Government is from property wealth, particularly in the most expensive places to live in the UK.

But, even in regions where house prices are comparatively cheaper, inheritance tax can still have a large impact.

Read More: How to avoid inheritance tax: key considerations and strategies 

For example, the North East of England had the second lowest number of estates subject to inheritance tax in the 2019/20 tax year. A total of 371 estates in this region were taxed, with the average taxable estate valued at £929,000. This means that £345 million in inheritance was received by HMRC in the 2019/20 tax year from estates in the North East alone.

So, although only approximately 1 in 20 households pay inheritance tax in the UK, rising house prices – coupled with frozen inheritance tax thresholds – are anticipated to result in many more estates becoming subject to this tax.

Notably, between the six-year period of 2016 to 2022, the Treasury collected below £32 billion in IHT, with the average annual receipt totalling £5.3 billion for this timeframe. In comparison, the Treasury’s IHT receipts between 2022 and 2028 are forecast to rise significantly, averaging at £7 billion per year and totalling £42 billion for this entire six-year period.

These projections reflect the fact that many more estates are likely to be tipped over the inheritance tax threshold, perhaps without the homeowners even realising.


The residence nil-rate band: what is it and how could it help?

In addition to the £325,000 nil-rate band, you could also benefit from an additional £175,000 tax-free allowance, known as the residence nil-rate band (RNRB), to be used on your primary residence. This could take the overall amount you could potentially pass on to your beneficiaries, completely free of inheritance tax, to £500,000.

The conditions for an estate to be able to fully utilise this additional tax-free threshold are as follows:

  • You must own a property worth more than £175,000
  • You must have lived in this property on or after 8 July 2015
  • This property must be left to any of your direct descendants, including children, grandchildren, great-grandchildren, stepchildren, adopted children and/or foster children

It should be noted that:

  • This allowance can only be used on one property within your estate

  • Qualifying property below £175,000 can still benefit from the nil-rate band, however can only utilise as much of the band as the property is worth. For example, a property worth £150,000 could only benefit from £150,000 of the nil-rate band.

  • If you are married or in a civil partnership, you can leave property (and any other assets, regardless of their value) to your surviving spouse or civil partner, completely free of inheritance tax. If you choose to do this, your RNRB would remain unused, and it can then be transferred to your surviving partner’s estate, potentially doubling their RNRB to £350,000.

  • If your entire estate is worth more than £2 million, you would be subject to RNRB taper relief. This means that, for every £2 that your estate exceeds £2 million, the RNRB available decreases by £1. For example, if your total estate is worth £2.2 million, you would only be eligible to benefit from £75,000 of the nil-rate band. 

Read More: What is the current IHT threshold in the UK?

However, it is important to note that the number of criteria and caveats associated with the nil-rate band mean that many people, for example those without any direct descendants, cannot benefit from this additional allowance at all. 

So, for those who may not be able to benefit fully, or indeed at all, from the RNRB, it could be important to explore a number of additional routes for mitigating a potential inheritance tax liability, to ultimately maximise the tax-efficiency of your estate and pass on as much wealth as possible to your loved ones.


How can I mitigate a potential IHT bill?

Despite the fact that property prices are predicted to fall over the next few months, and possibly the next few years, the Office for Budget Responsibility still expects inheritance tax to generate approximately £42 billion in total between 2022 and 2028.

With this forecasted rise in inheritance tax liability has come a growing demand in recent months to explore the routes available for mitigating the impacts of the erosive tax. Whilst a number of options exist in the UK for achieving this, some of the most popular routes include gifting, establishing trusts, and making inheritance tax efficient investments.


Gifting involves giving assets away to your family, friends or other beneficiaries, and can be a beneficial tax-mitigating route from an IHT perspective because the gifted assets no longer form part of your estate, should they be given away at least seven years before your passing. 

Note: Some gifts fall outside of your estate without having to fulfil the seven-year rule, such as gifts that utilise gifting allowances and gifts to qualifying charities.

However, for people whose wealth is tied up in property, making significant gifts may not be a viable option to minimise the value of an estate and a subsequent IHT bill whilst maintaining the same standard of living. 

A more obvious – yet often overlooked – point to consider is that gifting requires assets to be moved into the estate of another individual, and so following this route can result in the loss of control over said assets. This may not be suitable for individuals who wish to retain control over their wealth, and so other options, such as tax-efficient investments, may be preferred. 

Overall, gifting assets is only likely to be suitable as an IHT-planning strategy when an individual has significant cash wealth, or wealth stored in highly liquid investments.


Often used to mitigate significant IHT bills, different types of trusts can be established in different circumstances to move assets out of the control of your estate, and into the control of a trustee who looks after the assets until you pass away, and subsequently distributes the wealth to the beneficiaries of the trust, as legally agreed.

Trusts can provide 100% inheritance tax exemption, however, as with gifting, require at least seven years before the assets become free of IHT. It should be noted that assets held in trust are no longer under your control, but rather under the control of the trustee, and these arrangements can be highly complex and costly to establish and maintain.

Tax-efficient investments

Offering a slightly different approach to estate planning than trusts and gifts, tax-efficient investments are still held in your name and remain part of your estate. Additionally, tax-efficient investments can enable your capital to grow and potentially maximise the amount of wealth you can leave to your loved ones. 

With Government-backed schemes such as the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS), you can invest in venture capital opportunities with the potential to achieve superior returns  when compared to many traditional asset classes (in some cases targeting 10x money-on-money, or above). You could also benefit from IHT exemption on your shares after holding them for just two years.

Access: Free Guide to Tax Efficient Investing

Tax-efficient investments such as the EIS and SEIS allow you to retain control over your assets, and so still form part of your estate. This route can be beneficial for high-net-worth individuals and sophisticated investors in particular, however for those with an entire estate worth more than £2 million, this could potentially impact how much of the residence nil-rate band they are able to utilise (due to the taper effect that impacts large estates). 

The significance of RNRB taper relief depends on whether or not you own a qualifying property, and whether or not you are planning to leave the home to your direct descendants. 

Importantly, inheritance tax relief available via most tax-efficient investments only takes two years for shares to become 100% exempt from IHT, significantly quicker than most types of gifting and trusts (which require seven years). 

Investors should note that investing with the aim of minimising IHT is a risky strategy and, as with any investment, returns are not guaranteed. This means that only individuals with sufficient capital and a tolerance for a high risk/high return investment strategy should consider this route.


The bottom line

Ongoing rises in property prices (particularly in areas where house prices are already high) combined with the current unpredictable inflationary outlook, means that the total value of many estates in the UK are likely to keep rising. Meanwhile, the inheritance nil-rate bands are frozen at £325,000 and £175,000, respectively, until 2028, suggesting that these tax-free allowances are likely to be used up increasingly quickly.

Ultimately, more estates are anticipated to become subject to inheritance tax, and those already eligible for IHT are set to see the proportion of their taxable estate to increase,  earning the treasury an additional £5.4 billion in IHT over the six-year period of 2022 to 2028 (a total of £42 billion, up from £36.6 billion in the period of 2016 to 2022). 

This suggests that even those who don’t regard themselves as particularly wealthy may find that their estates are more likely to be subject to inheritance tax, whilst those already classed as HNWIs could be forced to further consider IHT mitigating strategies.

For any individual that falls into either of those brackets, a range of additional reliefs and exemptions can be used to reduce a potential inheritance tax bill with careful planning. Above all, it can be useful to conduct adequate due diligence and seek professional advice to ensure that investments are structured in a tax-efficient way, and you are making full use of the available allowances and rules.

Free guide download  to Inheritance tax

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