For those of you fortunate enough to receive a Christmas bonus, this is the ideal time to investigate investment options and give yourself a gift that, if things go well, keeps on giving. Read on to see some options that aspire to the perfect combination of tax efficiency and return potential that will make your bonus work as hard for you as you did for whoever gave it to you.

Of course, receiving a Christmas bonus is not a requirement for exploring tax efficient investments. For those investing in the opportunities we'll go on to talk about below, it is important to remember that in many cases they are high risk and you should only invest money you can afford to lose as there is no guarantee you'll get your original investment back, and you could lose everything you invest. That said, there is a cost/reward calculation to be done, and the possibility of sizeable returns, and tax reliefs alongside, does still motivate a great number of experienced investors to invest.

To find out more about how the Access EIS Fund can work for you, use the link below to schedule a call with our expert, Ben Charrington.

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Stocks and shares ISA

For those who are newer to investing, a stocks and shares ISA represents a simple and relatively low-risk way to reduce your tax bill, while potentially earning a return on your investment. There is an annual allowance, as its an ISA, of £20,000, so if you're already filled up any existing ISAs for the financial year, you'll need to wait until the next one to invest in this.

How is it tax efficient?

  1. Any dividends you receive from shares acquired through your ISA are tax free.

  2. You do not pay capital gains tax on any gains realised on investments made through your ISA.

  3. Interest earned is tax free.

Are there any other benefits?

  1. It has a higher return potential than a cash ISA or other savings options.

  2. Ideal for newer investors, as the criteria of your investments can be altered, and you can even switch to another ISA provider at any time if you're not happy with your current provider.

  3. If you want to invest ethically, you can stipulate this at the outset and your ISA will only invest in ethical companies.


While you can remove your money at any time, it’s advisable to remain invested for at least five years. You can also only invest £20,000 per year, and while your investments might go up, they could also go down.

EIS fund

The real powerhouse of tax relief when it comes to high risk investments is the EIS fund, or direct investments into EIS eligible companies. EIS is a program established to incentivise investment into new businesses, and allows investors to claim tax reliefs on investments of up to £1,000,000 per year, or £2,000,000 if that money is invested into knowledge intensive companies.

How is it tax efficient?

  1. Investors can claim 30% income tax relief on up to £1m invested in EIS, as long as the shares are held for at least three years. This figure rises to £2m if the first million is invested in 'knowledge intensive companies'. This tax relief can be applied to the year you acquired your EIS shares, or the previous year.

  2. Investments qualify for business relief, which gives 100% inheritance tax exemption.

  3. Investors gain the option to defer capital gains tax.

  4. There is no capital gains tax payable on any gains you realise on EIS shares.

  5. Investors can claim loss relief for any investments that fall below their original value.

Are there any other benefits?

  1. On the softer side, but an important pro for many, is the fact that your investment is benefiting new businesses and technologies that could make a significant impact.

  2. Investing in startups allows investors to diversify their portfolio outside.

  3. Investments in private companies are uncorrelated investments, meaning they are less affected by market volatility.


Investing in startups is a high risk investment, and there’s a chance of your investment falling in value. Because of the risk of funds falling in value, it's advisable to build a sufficiently large portfolio so that any failures represent a smaller proportion of your overall holding. This is a long term investment, so you should expect to wait between seven and ten years for your investment to mature. EIS shares are relatively illiquid, and can be hard to dispose of.

For a data-driven fund with a minimum investment of £5,000, find out more about SyndicateRoom's Access EIS Fund

access eis fund

Venture Capital Trust (VCT)

Venture Capital Trusts are publicly traded entities that invest in small businesses and pay investors dividends when the value of the underlying holding goes up. They are high risk, and because investors buy into an established portfolio, they run the risk of paying for growth that has already happened. With this in mind however, the potential for regular dividend payments is attractive to certain kinds of investor.

How is it tax efficient?

  1. Investors can claim 30% income tax relief on up to £200,000 per year, provided they hold their shares for at least five years.

  2. The investment receives tax free growth, and any returns on investment are paid as tax-free dividends.


Because VCTs invest in fledgling businesses, they are substantially riskier than an ISA. Your investment may not gain value, and may lose value.

Christmas Bonus FAQs

  1. How do most people spend their Christmas bonus?

While many people like to use their Christmas (or holiday, or seasonal bonus), to treat themselves, pay off their credit card or to top up their savings, many others like to take advantage of the additional cash to invest in something that's a little higher risk than their usual investment choices.

  1. Should I spend my holiday bonus or save it?

Deciding whether to spend or save your end-of-year bonus is really down to you. If you have any high-interest debt, such as credit cards then consider paying those off first. Consider using anything that's left to enhance your investment portfolio, save for unexpected expenses or, of course, spend on something that benefits you and your family!

  1. How can I best invest my bonus?

When considering an investment for your Christmas bonus, evaluating your financial goals and risk tolerance is essential. Look into options such as contributing to your savings account, placing money into an ISA, building an emergency fund or tax-efficient investing using such as EIS investing.

  1. Can I use my Christmas bonus to make even more money?

Using your bonus to make even more money can involve exploring investment options with the potential for greater returns. Strategising and looking for ways to leverage the bonus is crucial. If you’re unsure about your best approach, we recommend consulting an Independent Financial Advisor.

Get your free guide to EIS and capital gains tax

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Manage your capital gains with EIS.

The Enterprise Investment Scheme offers investors significant tax reliefs which range from income tax relief to capital gains tax (CGT) deferral and disposal relief. If you want to get up to speed on EIS CGT deferral rules, the CGT deferral relief time limit and more, download our free guide to how the capital gains tax reliefs work, how to claim them and how to get started as an EIS investor.

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