What type of business can open an InvestEngine Business Account?
Limited companies and partnerships can open an InvestEngine Business Account. If you run another business type, please contact us to discuss.
How much of my business cash should I invest?
The InvestEngine Business Account has a minimum investment level of £2,000. It is aimed at limited companies (including contractors) and partnerships that have surplus cash in their business.
Most businesses need to retain an amount of cash for their day-to-day needs and liabilities like tax and VAT. But they may also be accumulating surplus or spare cash which is earning little or no return. This surplus could be referred to as the cash reserves or retained profits of your business.
How much you want to invest in the InvestEngine Business Account is down to you and your business circumstances - InvestEngine is not authorised to give financial advice. If you need advice we would suggest contacting an independent financial adviser (IFA) or a finance professional like an accountant.
My business doesn’t have an LEI (Legal Entity Identifier) number. How can I get one?
It is a general regulatory requirement for businesses to have an LEI (Legal Entity Identifier) number for financial transactions. You will need an LEI to open an InvestEngine Business Account. If you don’t already have an LEI, InvestEngine can provide one to customers for free for the first year, and then at a cost of £45 a year subsequently.
What do the investment returns from my InvestEngine Business Account consist of?
Your InvestEngine Business Account invests in a range of exchange traded funds (ETFs) that are listed and traded on the London Stock Exchange. These ETFs invest in shares, bonds and alternative assets such as gold.
Your investment returns could variously consist of dividend income, interest income and capital gains/losses.
The ETFs in your portfolio are domiciled (based, in legal terms) in Luxembourg or Ireland. This means that the income you receive is categorised as “overseas dividends” or “overseas interest” — even where the ETF is invested in UK shares or bonds.
This income categorisation is shown in the Consolidated Tax Certificate (CTC) which we provide you with at the end of each tax year.
Capital gains and losses are shown separately in the Capital Gains Tax Report which we also provide you with at the end of each tax year.
Should you require a CTC or Capital Gains Tax Report for a period other than the tax year ending 5 April, please email email@example.com.
How are investment returns from my InvestEngine Business Account taxed?
InvestEngine doesn’t deduct tax from income or capital gains on your Business Account. However, your business may need to pay tax on these investment returns.
If you are investing as a UK-based company, your returns are subject to the UK corporation tax regime.
This means that interest income (from bond ETFs, for example) and realised gains (net of losses) are potentially liable for corporation tax at 19%. However, dividend income (from equity ETFs, for example) is usually exempt from corporation tax. InvestEngine portfolios generally earn both interest income and dividend income.
You may also be able to treat InvestEngine’s fees as an allowable business expense to reduce your company’s corporation tax bill.
If your company does not prepare its accounts as a “micro-entity”, then unrealised gains and losses on certain types of ETFs also need to be declared for tax purposes each year. This additional requirement covers ETFs with more than 60% cash and other interest-bearing holdings.
Trading companies should also consider the impact of investments on their shareholders qualifying for Business Asset Disposal Relief (previously known as Entrepreneurs’ Relief) if the company is sold, or for Business Property Relief to reduce inheritance tax.
The above all applies to UK resident companies. If however your company isn’t resident in the UK, then dividends, interest and gains from your investment portfolio should not be liable to corporation or other UK taxes. Tax due will instead depend on where your company is resident and its tax arrangements with Luxembourg and Ireland, where the ETFs are domiciled.
For tax reporting purposes, at the end of the UK tax year InvestEngine provides Business Account holders with a Consolidated Tax Certificate (CTC) showing the interest income and dividend income their portfolio has earned, and a Capital Gains Tax Report detailing realised gains and losses on ETFs in their portfolio. Both documents cover the 12 months ending 5 April. Should you require a CTC or Capital Gains Tax Report for a different period, please email firstname.lastname@example.org.
Please note that InvestEngine does not intend the above to be tax advice and you should speak to your own tax adviser or HM Revenue & Customs to confirm the tax implications of investing your business cash. InvestEngine will not be responsible for any action or inaction as a result of this information.
How is InvestEngine different to peer-to-peer (P2P) lending?
InvestEngine is NOT a P2P lender - with us you are investing in a portfolio of funds called ETFs that track the performance of stock markets, bonds and other assets.
An important difference is protection of your money under the Financial Services Compensation Scheme (FSCS). With InvestEngine, individuals and small businesses may be eligible for compensation from the FSCS. (For FSCS protection, a small business needs to meet two or more of the following conditions: under £10.2m turnover; balance sheet no bigger than £5.1m; 50 or fewer employees. See FSCS for more information.)
This contrasts with P2P lending where your money is NOT protected by the FSCS - whether you are an individual investor or a business.
Also, the ETFs that comprise your InvestEngine account are themselves bought and sold on the stock market. This means that if you want to withdraw some or all of your money, we can sell your ETFs straight away and you will generally have your cash back in three business days. Plus, we don’t charge for withdrawals.
In contrast, with some P2P lenders, it can be difficult getting your money back quickly - you may have to wait many weeks. And there can often be high charges for exiting your P2P investments.
InvestEngine® is a trading name and registered trade mark of InvestEngine Limited. InvestEngine (UK) Limited is Authorised and Regulated by the Financial Conduct Authority. The Firm Reference Number is 801128. InvestEngine (UK) Limited is incorporated in the UK with company number 10438231 and has its registered office at Lawford House, Albert Place, London, United Kingdom.