This page contains a glossary of terms to do with tax efficient investing to help with any questions you might have regarding our website.

Glossary of Terms

Use our glossary to find explanations of common financial terms which are used on our website and in the description of our tax-efficient investment services.


Active Management
The use of a human element actively managing a fund’s portfolio, where they will attempt to beat the market

Advance Assurance
An assurance provided by HMRC of a company’s eligibility to meet EIS or SEIS qualifying status before issuing shares

AI (Artificial Intelligence)
The recreation of human intelligence by machines

Alternative Investment Fund Manager

Alternative Asset
An asset which is not a mainstream asset such as stocks and bonds, but may include private equity, real estate, commodities etc

Angel Investor
A high net worth individual who usually invests in startups/small businesses

Anything that is owned by a business or individual that has a value

Asset Allocation
Designation of assets according to risk and reward goals of the portfolio

Asset Class
A group of securities which perform in a similar way, such as equities or bonds


Blue Chip
Large companies renowned for their top quality management

Business Investment Relief (BIR)
Where non-domiciled UK residents invest in the UK in qualifying investments without making a tax remittance

Business Relief (BR)
Is a relief that decreases the value of Inheritance Tax (IHT) charged once an investment has been held for a minimum period of two years. Individuals who make investments that qualify for BR could benefit from significant IHT savings. BR is usually claimed on death or other times that IHT can be claimed


Financial assets or their financial value used to generate wealth through investments

Capital at Risk
Capital that is set aside to cover risks

Capital Gain or Loss
A rise or fall in the value of an investment made. The gain or loss is not made until the asset is sold

Capital Gains Tax (CGT)
The tax on the profit made when you sell an asset that has gained in value. This rate varies between 10% and 28%

Capital Growth
Is the gain in an asset/investment over time

Capital Raise
The practice of raising money from various investors which can then be dedicated to a specific fund or investment


Discretionary Investment
A form of investing where the fund manager makes the investment decisions on behalf of the client

A method of investing which involves spreading investments across a wide range of investments to minimise and control risk

Resident in a country other than the country of birth


Earnings before Interest, Taxation, Depreciation and Amortization

Enterprise Investment Scheme (EIS)
This is a UK government tax relief scheme that promotes investment into early stage unquoted companies. It offers Income tax relief of 30% of the initial investment made and exemption from CGT on profits provided the investment is held for a minimum of 3 years

The means by which investors dispose of their investment


Financial Conduct Authority (FCA)
The UK financial regulatory body covering investment, which speaks to ensure the customer is protected and treated fairly

A fund is an amount of capital built up to invest in certain investments

Fund Manager
The person or firm who looks after a portfolio/fund of assets on behalf of the investor


High Net Worth Individual
A person who is of high net wealth, often defined as someone with income of more than £100,000 or investable assets no less than £250,000

HM Revenue & Customs (HMRC)
The central government department responsible for the collection of taxes and duties

Hurdle Rate
The minimum rate of return to investors, before the management incentive kicks in


Income Tax
A tax that is on the amount that an individual earns

Inheritance Tax (IHT)
A tax that is levied on the assets of someone who has died. Usually if the assets are worth more than £325,000 then a 40% tax will be standard on anything more than that

Information Memorandum (IM)
A prospectus containing the full detail relating to a specific investment

Initial Fee
An initial one-off payment at the beginning of an investment by an investor

Intellectual Property
Intangible knowledge owned by an individual, that is usually created by that individual.

A company which receives investment

Capital dedicated to a certain company or fund

An individual/company that will make an investment with capital/equity


Knowledge Intensive Company (KIC)
A company that in carrying on its trade deploys a degree of innovation, research, and development of intellectual property


The availability of a person or company’s assets. More liquid will make them more available, less liquid will make them less available


NAV (Net Asset Value)
The current value of a fund measured by the sum of its constituent parts, calculated by subtracting the liabilities from the assets and dividing the result by the number of shares


Parent Company
A company that is in control of one or more other companies, known as their subsidiary companies

Passive Management
A management style where the investor will aim to follow a certain formula

A group of assets held by financial professionals or investors

Typically the original sum of an investment made

Private Equity
Funds which invest on behalf of a series of individuals


The profit/loss generated from an investment

The possibility of losing some or all of an investment

A series of conditions introduced on EIS, SEIS and VCT schemes designed to direct investment into growth companies where there is significant risk of a potential capital loss


The growth phase of a company following the start-up

The original capital that is used when starting a business

Similar to the EIS however, this is for earlier stage investments. As a result, investors can claim up to 50% tax relief as opposed to the 30% with EIS

Series A
Usually the first round of funding for a business, typically by venture capitalists and angel investors

Series B
Usually the second round of funding for a business

A newly developed and entrepreneurial business

Subsidiary Company
A company that is controlled or owned by a parent company


A charge levied on individuals or companies that is paid to the government. For example, individuals pay capital gains tax on profits made from investments

Tax Efficient Scheme
Schemes offered by the UK government which can provide tax relief on certain taxes paid, such as income tax, CGT and inheritance tax relief

Tax Relief
The ability to pay less taxes or claim back certain paid taxes

A fiduciary relationship where the trustee holds the title to property or assets

Individuals or companies responsible for managing a specific trust


A unicorn is a startup that has a value of more than $1billion


Venture Capital Trust (VCT)
The VCT is another tax efficient scheme run by the UK government. It provides income tax relief of up to 30% on investments that are held for longer than 5 years. It also provides tax free dividends and freedom from CGT on disposal