This graph shows how someone who invested £100,000 in OT(S)EIS in each year since it began in 2012 would have done on average, compared to how they would have done by investing the same amount at the same time in a FTSE 100 tracker fund (we have assumed a dividend yield of 0.9% per quarter).
So, for example someone who invested £100k in OT(S)EIS in the year to 5 April 2013 (labelled "2012" on the graph above), would have received the following (after the payment of all fees):
|Cash returned by way of reduction in income tax:||£ 37,181|
|Value of the shares as at Q1 2020:||£188,198|
Someone investing £100k in the same year in an FTSE 100 tracker would have received the following:
|Cash returned by way of dividends:||£ 26,983|
|Value of shares as at Q1 2020:||£ 88,462|
In OT(S)EIS, there is an immediate increase in value due to the 50% tax refund which comes with every SEIS and later 30% with each EIS investment. After the first three years, the gains have come from the increase in share prices of the investments. All investments are valued by the latest share price paid by incoming investors, and all fees are included in these figures.
The big disadvantage of an investment in OT(S)EIS is that it is a long-term investment and 100% illiquid. Exits will surely happen, and we have had a great number since 1983. But we cannot control the timing of exits and a 10-15 year wait is expected. But when they do come, exits will be tax free and outside Inheritance Tax. An investment in OT(S)EIS is ideal for those looking for a long-term, tax-efficient investments and particularly as a means of passing value to the next generation.
Past performance is not a guide to future performance. If you would like to make an investment in OT(S)EIS - The Start-up Fund, please visit the Invest page.