Most investors fall in love with schemes long before they understand the ground they stand on. SEIS, EIS and VCTs shine brightly at first sight. Tax relief on entry. CGT relief on exit. IHT perks tucked into the footnotes. It feels like a reward for playing the game in the “proper” way.
For many employees on PAYE, these schemes are one of the few ways they can stretch their post-tax income into something resembling long-term capital. A quick refund from HMRC softens the blow of investing after paying income tax and national insurance. To someone with no access to corporate structures, it appears rational. It even feels generous.
Yet an experienced business owner sees a different picture. They have already built an engine. Their profits sit within a company before personal taxes are applied. They have gears that ordinary savers cannot reach. Once you stand on that side of the fence, the government schemes no longer look like the main road. They look like surface streets full of temporary signs and lights that change without warning.
The Autumn Budget 2025 exposed this reality with unusual clarity. Overnight, reliefs that had shaped entire industries shifted. Some were cut. Others diluted. A few were left untouched, prompting people to wonder when the next blow might land. The message was simple. Government schemes are not carved in stone.
If you run a business and you can invest via a Mural Crown SAFO paired with an Equity Exchange Vehicle, the question becomes sharp. Why remove capital from your own structure, pay personal taxes to access a scheme, and then hope the rulebook holds? Once the trading company or EEV pays corporation tax, the SAFO receives the profits without any further corporation tax. Later, the eventual sale of a trading company is usually tax-free under the Substantial Shareholder Exemption. SSE behaves like the system’s own built-in CGT relief. It is not a personal concession. It is part of the corporate architecture, designed to keep business transactions moving.
Viewed through that lens, the comparison changes shape entirely.
The Attractive Surface of SEIS, EIS and VCTs
When someone first hears about SEIS or EIS, the conversation often starts with the headline numbers. A chunk of your investment can be reclaimed through income tax relief. If the company does well, you might never pay CGT on disposal. If it goes badly, loss relief may soften the blow. VCTs offer tax-free dividends and a pool of venture opportunities, often wrapped in glossy brochures showing founders smiling in bright studios.
There is nothing fraudulent about these incentives. They are real. They can be helpful for people who cannot avoid income tax. A nurse, an engineer, a teacher, a civil servant. People who have no practical route to invest company profits because they do not have a company. For them, these schemes offer a door into a world once reserved for the wealthy.
The marketing often leans into that emotional appeal. It tells a neat story. The government supports innovation. You are contributing to Britain’s future. You are being rewarded for your courage. The story is warm and persuasive. It invites trust.
This surface is not the problem. The problem sits underneath.
The Foundation Can Shift Without Warning
The Autumn Budget 2025 reminded everyone that reliefs are not permanent. They sit on ground that the government can alter. VCT upfront income tax relief fell from 30 percent to 20 percent. EOT CGT relief, once seen as almost sacred, was cut in half. Tighter conditions were placed on several venture capital rules. Some observers saw parallels with earlier episodes, such as when pensions, long believed to be outside the estate for inheritance tax, were brought into view.
The pattern is familiar. In one decade, a relief is praised. In another, it is clipped. Occasionally, it disappears. These changes rarely aim at individuals. They respond to fiscal pressure, political shifts or criticism of perceived loopholes. Yet they catch investors in the crossfire.
Relying on these schemes is similar to renting a house on land you do not own. The interior belongs to you. The ground does not. The landlord can change the terms. You are allowed to enjoy the property but the rules of occupation are set elsewhere.
A business owner with a SAFO does not need to occupy that kind of space. They have their own land.
Business Owners Have a Different Highway Entirely
A founder with a profitable trading company is not forced to invest out of personal income. Their capital sits inside a company before personal tax emerges. They can direct profits into their SAFO without incurring income tax, dividend tax or CGT. It changes the starting conditions. PAYE investors begin at the bottom of the hill and climb. Business owners start halfway up.
When a business owner withdraws funds from their SAFO to use SEIS, EIS, or VCTs, they reverse that advantage. The moment they withdraw the funds; personal taxes are due. Reliefs may help but they rarely neutralise the entire burden. In exchange for that cost, the owner steps into a world full of holding periods, qualifying conditions and political uncertainty.
The alternative is straightforward. Leave the money where it already grows.
The SAFO Advantage, Once Placed in Sharp Light
Inside the SAFO, the logic changes. The trading company or EEV has paid corporation tax. The dividend enters the SAFO untouched by a second layer of corporation tax. The SAFO becomes a reservoir. Capital flows in at high pressure and remains available for investment without further leakage.
A SAFO can finance a property SPV, buy shares in another company, back a management team or acquire assets in a sector with growth prospects. It does not need a qualifying status designed by civil servants. It does not need to wait three years. It does not need to restrict investments to narrow categories. The founder sets the rules.
Later, when the SAFO sells a trading company, SSE usually eliminates CGT. This relief is often misunderstood. SSE is not a personal perk. It is the system’s own mechanism for keeping the corporate economy moving. Removing it would disrupt mergers, acquisitions, management buyouts and private equity transactions. It is not fragile. It is structural.
Compare this to an EIS disposal. The CGT relief is personal. It is concessionary. It can be altered at any Budget without destabilising the wider corporate environment. That difference matters more than most investors realise.
Inside a SAFO, you do not chase relief. The structure itself acts as the relief.
The Equity Exchange Vehicle Extends the Reach
The EEV strengthens this environment. Instead of extracting profits and paying personal tax to reinvest, the founder can exchange value for shares in the EEV. Cash can flow out over time at a controlled pace. The rest remains within the group. When paired with the SAFO, the EEV becomes a bridge between operating companies and long-term investment goals.
Different phases of growth can be financed within this ecosystem. Trading company sale proceeds, recurring income, rental income and dividends all sit in one orbit. The founder stays at the centre. No public schemes dictate the direction. No time-based restrictions grip the strategy. No qualifying criteria block the next move.
For some VCT managers, this type of structure has become attractive in its own right. It offers a controlled setting unaffected by Budget cycles. It mirrors the logic of institutional investing, in which capital flows through planned phases without political interference.
This is not theoretical. It is a practical model already used by family groups who prefer to shape their own paths rather than depend on incentives designed for someone else.
Inheritance Tax: One Side Depends on Policy, the Other on Structure
Inheritance planning brings the final contrast into view. Reliefs attached to personal investments can vanish. Alphabet shares inside a SAFO do not operate on concessions. They allocate control, value and income independently. They let a founder pass economic benefit to the next generation while keeping authority where it belongs. They allow value to shrink within the founder’s estate without ceding power.
When pensions were swept into the IHT net, many learned the difference between a structural rule and a policy preference. A SAFO works with company law, not personal reliefs. Alphabet shares, growth shares and freezer shares create a permanent framework. They do not rely on HMRC generosity.
A founder can design a structure that survives many Budgets. Very few investors using SEIS or EIS can say the same.
So, What Does a Business Owner Want Today?
Most founders care about clarity. They enjoy momentum. They do not want their strategy altered by policy movements or campaigns by external groups. They like systems they can configure once and refine over time. They appreciate tax efficiency but dislike dependence. They understand that reliance on government incentives is fragile.
If a founder already owns a SAFO, they stand at a fork in the road. One route leads to personal extraction, relief chasing and unpredictable conditions. The other leads to an ecosystem they own outright. The SAFO and EEV combination behaves like a dedicated rail network. Build it once and every future journey runs on your own timetable. Government schemes resemble tickets that work only while the operator keeps the same schedule.
PAYE investors may still find SEIS, EIS and VCTs useful. They cannot reach the corporate structures available to business owners. Their starting point is different. The schemes were designed with them in mind.
Business owners have no such limitation. Their capital can move at pre-tax speed. Their investments can run without outside rules. Their exits can be tax-free due to SSE. Their long-term plan can sit on machinery that cannot be altered casually.
The real question is simple. If you already have an environment that offers certainty, control and flexible expansion, why leave it to chase reliefs that may not exist in five years?
The most innovative founders are choosing the path that's theirs. They always have.
