Most angels never think about how their shares are held until the moment it costs them something - a relief that doesn't apply, a fee they didn't expect, a vote they don't get to cast. By then the structure is set. The choice between investing direct and investing through a special purpose vehicle is made at the front of a deal, often in a single line of the paperwork, and it shapes everything that follows.
Get it straight before you wire anything. The two routes can put you into the exact same company on the exact same terms and still leave you in very different positions.
What does investing direct actually mean?
Investing direct is the version most people picture. You agree terms with the company, your money goes in, and your name lands on its share register. You own shares in the startup itself - full stop. The reliefs, the rights, the eventual return: they all attach to you, because you're the shareholder of record.
This is the cleanest position an angel can hold. If the company qualifies and has its HMRC advance assurance in place, you claim SEIS or EIS relief in your own name, with your own certificate. There's no wrapper to maintain, no intermediary taking a cut, and no ambiguity about what you own. The cost is admin and access: you negotiate or accept the terms yourself, you handle your own paperwork, and you generally need a cheque big enough that the founder wants you on the register at all.
What is a special purpose vehicle?
A special purpose vehicle - SPV - is a company created to do one narrow job: hold a single investment. Investors put money into the SPV; the SPV uses that money to buy shares in the startup. You end up owning shares in the SPV, and the SPV owns shares in the company. There's a layer between you and the asset, and that layer is the whole story.
SPVs are everywhere in pooled deals. They're how a syndicate turns forty angels writing £2,500 each into one £100,000 cheque, and how cross-border or larger raises get organised without cluttering a founder's cap table. For the company, the appeal is obvious: one shareholder to manage, one signature to chase, one line to explain to the next investor who reads the structure.
An SPV is convenient for everyone except, sometimes, the person whose money is in it.
The convenience is real and it isn't only the founder's. Pooling is what lets a smaller angel into a deal that would otherwise be out of reach, and it spreads the running costs across a group. But the trade lands on the investor, and it lands hardest on tax.
Where the tax actually lands
This is the part that decides most decisions, so let's be precise. SEIS and EIS relief is given to an investor who holds qualifying shares in the trading company. Hold those shares yourself - directly - and the relief is yours to claim. Hold them through an SPV, and you no longer own shares in the trading company at all; you own shares in the SPV. In the ordinary case, the relief doesn't reach you.
That matters because the reliefs are not small. Under the current rules, SEIS gives 50% income tax relief on up to £200,000 of investment a year, and EIS gives 30% on up to £1,000,000 a year (or £2,000,000 where at least £1,000,000 goes into knowledge-intensive companies). Both require a three-year minimum hold, and both can carry losses and defer or exempt gains. Lose access to that through the wrong wrapper and you've quietly given up a large slice of the deal's economics. For the mechanics, see our walk-through of the SEIS3 and EIS3 process.
The nominee, which is not an SPV
Here's the distinction that trips people up. A nominee arrangement also pools investors behind a single line on the cap table - but a nominee holds the shares on your behalf, in its name, while you remain the beneficial owner. For tax and ownership purposes you're treated as holding the underlying shares directly, so SEIS and EIS relief survives and you receive your own SEIS3 or EIS3 certificate. Most UK syndicates use a nominee for exactly this reason.
An SPV is different in kind, not degree. The SPV is the owner; you own the SPV. That single fact is why a nominee keeps your relief and an SPV usually doesn't. Don't take the label at face value - ask the question directly: at the end of this, do I hold the company's shares, or the vehicle's?
Who controls the shares, and who votes?
Ownership is only half of it. When you invest direct, your rights as a shareholder are yours - votes, information, pre-emption, whatever the shareholder agreement grants you - and you exercise them yourself.
Inside an SPV, those rights belong to the SPV, not to you. The person or firm running the vehicle - the manager - typically votes the shares, signs consents, and decides how to act in a follow-on round or an exit. You have rights against the SPV under its own documents, but you've handed the day-to-day control of the underlying stake to whoever runs it. For a passive backer that's often fine, even welcome. If you wanted a seat at the table, it's a meaningful give-up.
What does each route cost to run?
A direct holding has almost no ongoing overhead. The shares sit on the register; you keep your certificate and your paperwork; there's no wrapper to file accounts for.
An SPV is a live company, and someone has to run it - incorporation, annual filings, accounts, and often a per-deal set-up fee plus carry for the lead. Those costs are usually drawn from the pooled money or the eventual return, so they erode your net outcome whether or not the deal works. None of that makes an SPV the wrong choice - for a £2,000 cheque into a deal you'd never otherwise reach, the cost may be entirely worth paying. It's simply a line that exists on one route and not the other, and it belongs in the comparison.
When each route tends to be used
Neither structure is better in the abstract; they answer different problems. As a rough map of where each shows up:
- Direct tends to suit larger cheques, investors who want the SEIS/EIS relief in their own hands, and anyone who values control and information rights or expects to be active in the company.
- Nominee is the usual middle path in UK syndicates - pooled and tidy for the founder, but structured so the relief and beneficial ownership stay with the backer.
- SPV fits pooled, cross-border or larger deals where a single clean shareholder is worth more than each backer's tax position - and where investors accept that the reliefs may not flow through.
The company-side rules sit underneath all of this and shift periodically. As of HMRC guidance updated 6 April 2026, an EIS company must generally have gross assets no greater than £30 million before the share issue, can raise up to £10 million across the venture capital schemes in any twelve months and up to £24 million over its lifetime, and must be within seven years of its first commercial sale - with higher ceilings for knowledge-intensive companies. Because these figures move, confirm the current numbers in HMRC's EIS guidance and the guidance for investors before you rely on them.
The one question to settle first
Strip away the jargon and the choice reduces to a single fact: whose name the shares are ultimately held for. Direct holding and a nominee leave the company's shares - and the reliefs - with you. An SPV puts a company between you and the asset, usually taking the SEIS/EIS relief and the direct control with it, in exchange for access and a tidier cap table.
Get that one answer before you commit, and the rest of the deal documents read very differently. This piece is general information, not financial or investment advice - where the tax or the structure carries real money, take FCA-regulated advice before you sign.
Frequently asked questions
Can you claim SEIS or EIS relief if you invest through an SPV?
Usually not. If the SPV is a company that buys and holds the startup's shares, you own shares in the SPV, not in the underlying company, so the SEIS and EIS reliefs - which depend on you holding qualifying shares in the trading company - generally do not flow through to you. A nominee arrangement is different: the nominee holds the shares in its own name but you are treated as the beneficial owner, so relief is preserved and you get your own SEIS3 or EIS3 certificate. The label matters less than the substance, so the question to ask is whether you end up holding the company's shares or the vehicle's.
What is the difference between investing direct and through an SPV?
Investing direct means you appear on the startup's share register and own its shares yourself. Investing through a special purpose vehicle means your money goes into a separate company set up to hold the investment; that vehicle owns the startup's shares, and you own a slice of the vehicle. Direct gives you the cleanest tax position and a direct line to the company. An SPV pools many small cheques into one tidy line on the cap table, which is easier for the founder to manage but adds a layer between you and the asset.
Is a nominee the same as an SPV?
No. A nominee holds shares in its own name but on your behalf, so for tax and ownership purposes you are treated as holding the underlying shares directly - which keeps SEIS and EIS relief available. An SPV is a separate company that itself owns the shares; you own shares in that company rather than in the startup. The two are often confused because both pool investors behind a single line on the cap table, but they sit on opposite sides of the tax question.
Why would a startup ask angels to invest through an SPV?
Founders often prefer an SPV because it keeps the cap table clean. Twenty small angels become one entry, which simplifies future fundraising, shareholder votes and admin. SPVs are also common when investors are overseas, when a syndicate is pooling many cheques, or where the structure needs to sit across borders. The trade-off lands on the investor: less direct control and, in most cases, no SEIS or EIS relief.
Does investing through an SPV cost more?
Often, yes. An SPV is a real company that has to be set up and administered - filings, accounts, sometimes carry and a per-deal fee to whoever runs it. Those costs come out of the pooled money or the eventual return. A direct holding usually has no ongoing wrapper to maintain. This is general information, not financial or investment advice; consider taking FCA-regulated advice before you invest.