Strategic Financial Planning for FinTech Startups: A Founder’s Guide to Tax-Efficient Growth
Date: September 09 2025
Author: MHA
At the heart of this planning lies tax efficiency, a lever that can unlock capital, preserve wealth, and align stakeholder interests.
We spoke with the Tax Planning, Wealth, and FinTech teams at MHA, the UK member firm of the global Baker Tilly network, to explore how founders can embed tax-smart thinking into every stage of their financial strategy.
From Formation to Exit: Structuring for Success
The foundation of any financial plan begins with how the business is structured. For UK nationals and residents, the path is relatively straightforward: a limited company offers control over personal tax liabilities through a mix of salary and dividends, while partnerships offer simplicity but less flexibility.
However, for foreign nationals, the landscape shifted significantly in April 2025. The UK’s new regime offers a four-year exemption on foreign income and capital gains for new UK tax residents. This window presents a rare opportunity to build a UK-based business while deferring global tax exposure. After year four, the rules align with those for UK nationals, making it essential to plan and optimise in this limited window.
Domicile, while no longer relevant for income tax, remains critical for inheritance tax. Long-term UK residency can bring worldwide assets into scope, underscoring the need for forward-looking estate planning.
Key takeaway: Your business structure isn’t just a legal formality. It’s a strategic decision that shapes your tax exposure, wealth accumulation, and exit potential. Your tax planning strategy should be dynamic and adapt to these time-based rules.
Jurisdiction and Structure: Thinking Beyond Borders
Where your company is based and how it’s structured can have profound implications for fundraising, operating costs, and tax efficiency. While the UK offers familiarity and access to talent, jurisdictions like Jersey, Guernsey, or Switzerland may offer lower corporate tax rates and strategic advantages.
Founders should start by mapping their commercial reality: Where are your customers? Where is your technology team based? Are there regulatory requirements that necessitate a local entity?
From there, layer in tax considerations: How do VAT and withholding taxes affect operations? Are there R&D incentives or IP regimes that support innovation?
Often, a holding company structure paired with one or more trading entities offers flexibility.
For existing groups reconsidering options, moving a UK company overseas is complex and may trigger exit charges. HMRC approvals and notifications are essential to avoid unintended liabilities. It is always important to consider where your shareholders are tax resident, how they will extract profits, the fundraising outlook for this jurisdiction, the tax treaty network for repatriating profits and how structures will support your exit strategy – including capital gains tax.
Key takeaway: Your corporate structure should reflect your business reality, support growth, and stand up to scrutiny – not just chasing tax advantages. Artificial arrangements can trigger scrutiny from tax authorities, who may for example challenge your company’s tax residence regardless of its legal registration.
Remuneration: Balancing Income and Incentives
Founders often grapple with how to pay themselves in a way that supports both personal financial goals and business sustainability. Here, company pensions emerge as a powerful tool as they are viewed as a business expense. Instead of paying yourself a large salary and then saving, consider arranging for the company to pay into your pension directly. These contributions then become tax deductible, reducing the company’s Corporation Tax whilst also growing tax-free for the individual, making them a cornerstone of long-term financial planning. However, remember to keep an eye on the annual contribution limits to avoid tax charges.
A common strategy considered is to draw a modest salary, just enough to secure National Insurance credits, while topping up income with dividends. Dividends are paid from the company’s post-tax profits but are not subject to National Insurance, making them a tax-efficient way to take money out of the business. However, such arrangements have to be truly commercial to withstand HMRC scrutiny and/or complications during future exit (including retrospective tax bills). It is essential to strike a balance between minimising tax liabilities and ensuring early compliance to avoid due diligence issues – founders must ensure they seek integrated financial and tax advice to ensure risks are appropriately managed.
Planning for a future exit is equally important. Pensions, being separate from the company, are not subject to Capital Gains Tax when the business is sold – this enables founders to build personal wealth in a tax-efficient manner. Equally, the Business Asset Disposal Relief can reduce CGT to just 10%, provided certain conditions are met. To be eligible, you need to own at least 5% of the company’s shares and have been a director for at least two years before the sale. There is new legislation being introduced from April 2026 in respect to business relief which may impact current plans and future structures of businesses.
Founders must tread carefully. HMRC scrutinises arrangements that blur the lines between personal and corporate finances. Loans that aren’t repaid, undocumented withdrawals, or overly aggressive schemes can trigger retrospective tax bills and penalties if viewed as “disguised remuneration”. The golden rule is to make sure that all payments you take from your company should be properly documented as a salary, a valid expense, or a dividend paid from distributable profits. Stick to standard, legal methods of withdrawing money to stay compliant.
Key takeaway: Thoughtful remuneration planning isn’t just about saving tax, it’s about building personal wealth, preparing for exit, and staying compliant.
Equity Incentives: A Strategic Currency
For FinTech and other tech-driven startups, equity is often the most powerful tool in the compensation arsenal. It allows companies to reward senior employees from a future buyer’s pocket rather than from current limited resources. Equity incentives, whether in the form of share options or conditional share awards, can be tailored to performance, tenure, or company milestones.
One increasingly popular structure is the “exit-only” option. These are designed so that employees can only exercise their options when the company reaches an exit event, such as a flotation or sale. This aligns employee rewards with shareholder outcomes and preserves equity until value is realised.
Government-Sponsored Share Plans: EMI, CSOP, SAYE, and SIP
Before exploring bespoke solutions, founders should first assess whether government-sponsored share incentive plans fit their company’s profile. These schemes offer compelling tax advantages:
- Enterprise Management Incentive (EMI) and Company Share Option Plan (CSOP) are tailored for senior employees. They typically eliminate income tax and National Insurance Contributions (NICs) on award or exercise, with only 10% Capital Gains Tax (CGT) due on sale. Employers also benefit from significant Corporation Tax deductions based on the value of shares acquired.
- Save As You Earn (SAYE) and Share Incentive Plans (SIP) are designed for broader employee participation, offering similar tax efficiencies.
However, these schemes have limitations. Companies with more than 250 employees or over £30 million in gross assets may not qualify for EMI. Similarly, share awards in subsidiary companies are excluded. The value caps – £250,000 for EMI and £60,000 for CSOP – may also be insufficient for senior executive packages.
Alternative Plans: Flexibility Without Compromise
When government-sponsored plans don’t fit, there are still several tax-efficient alternatives available under UK legislation. These include:
- Growth Share Plans
- Nil Paid Share Plans
- Target Share Plans
- Conditional Share Plans
These structures allow equity to be awarded without triggering income tax or NICs, with CGT payable only upon sale. They offer flexibility in design and can be tailored to performance conditions, vesting schedules, and share classes.
Valuation and Control: Balancing Motivation and Governance
Valuation plays a critical role in equity planning. Early-stage companies can offer more equity at lower valuations, making it easier to attract talent. For tax purposes, the value of minority holdings (<5%) is significantly discounted, sometimes by up to 80%. For example, in a company valued at £1 million with 100,000 shares, a 1,000-share holding may be valued closer to £2,000 than £10,000 for tax purposes.
Founders must also consider control. Typically, companies set aside 10–15% of equity for employee share plans. Granting an employee a share option gives the employee no share rights in the company (no voting rights, no dividend rights, and no rights to any sale proceeds from the company) until they exercise their option and get real shares.
To preserve governance, options and shares can be issued in separate classes with limited or no voting and dividend rights until vesting or exercise. The same can be done with share plans involving shares and not options. Awarding employees shares in the business does not give them voting and dividend rights if the class awarded to them doesn’t have those rights (or if it does, the subscription agreement takes away those rights until the shares fully vest in the employee).
Implementation: Expertise Matters
Designing and implementing a share plan requires a multidisciplinary team:
- A tax adviser with expertise in employee share incentives
- A lawyer to draft the necessary documentation
- A valuation expert to assess the company and its shares, ideally with HMRC agreement
This investment in professional support ensures compliance, maximises tax efficiency, and builds a robust incentive framework. Although an additional expense to a nascent business, many will offer some employee benefits, such as death in service, group pension plans or income protection to name a few of the more common benefits. This may prove to be important for a growing business to attract good employees, and they will also be more likely to keep loyal if they feel they are being competitively rewarded.
Beyond Equity: Employee Benefits That Build Loyalty
While equity is central, many FinTech businesses also offer traditional benefits such as:
- Death in service cover
- Group pension plans
- Income protection
These benefits can be critical for attracting and retaining talent, especially in competitive markets. Employees who feel valued and protected are more likely to remain loyal and contribute to long-term success.
Strategic Insight: Equity and benefits are not just compensation—they’re instruments of culture, retention, and financial planning. When structured thoughtfully, they align stakeholder interests and support sustainable growth.
Investor Readiness: Leveraging SEIS and EIS
Attracting investors to a FinTech business is significantly easier if you can offer them tax-efficient investment schemes like the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS). These government-backed schemes provide powerful tax incentives that reduce the risk for investors, making your business a more attractive proposition.
How do the Schemes Benefit Your Investors?
SEIS: This is for very early-stage companies and offers the most generous tax relief. Investors can get up to 50% income tax relief on their investment (up to £200,000 per tax year). Any capital gains from the sale of the shares are tax-free after three years, and investors can claim loss relief if the company fails.
EIS: Designed for slightly more mature companies. Investors can get up to 30% income tax relief on their investment (up to £1 million per year, or £2 million for a “knowledge-intensive” company). Like SEIS, gains are Capital Gains Tax (CGT) exempt after three years, and loss relief is available.
However, eligibility requires careful attention to both structural and operational details. While FinTech companies are often technology-driven, they must avoid activities excluded from these schemes – such as banking, lending, or dealing in commodities – which are considered financial services rather than qualifying trades.
To qualify for SEIS, your company must be a new business that has been trading for less than three years, with gross assets not exceeding £350,000 and fewer than 25 full-time employees. The business must have a UK permanent establishment and use the funds raised exclusively for growth and development. The lifetime fundraising cap under SEIS is £250,000, making it ideal for early-stage startups.
EIS, on the other hand, is designed for more mature companies. To qualify, your business must be within seven years of its first commercial sale (or ten years if it is classified as “knowledge-intensive”), have gross assets of no more than £15 million, and employ fewer than 250 people.
Under EIS, companies can raise up to £5 million per year, with a lifetime limit of £12 million (or £20 million for knowledge-intensive businesses). Crucially, HMRC will scrutinise whether your FinTech business is genuinely engaged in a qualifying trade. This means your revenue should stem from developing and licensing technology—such as SaaS platforms for financial advice or AI-powered credit scoring—rather than from financial transactions or asset management.
Key takeaway: Structuring your FinTech business to meet SEIS and EIS criteria not only unlocks investor capital but also signals operational discipline and long-term planning. It’s a powerful way to align your growth strategy with investor expectations and regulatory compliance.
Important Information
Enterprise Investment Schemes (EISs) and Seed Enterprise Investment Schemes (SEIS) are very high-risk investments.
Don’t invest unless you’re prepared to lose all the money you invest. These are a high‑risk investments and you are unlikely to be protected if something goes wrong.
The tax treatment depends on the individual circumstances and may be subject to change in future.
You are recommended to seek professional regulated advice before taking any action.
Conclusion: Financial Planning as a Strategic Imperative
For FinTech founders, financial planning isn’t a back-office function: it’s a strategic imperative. From structuring your business and remuneration to incentivising employees and attracting investors, every decision should be made with a view to long-term financial health, tax efficiency, and compliance.
For a truly integrated approach to planning that goes beyond optimising tax efficiency, our tax specialists work closely with MHA Wealth, our team of independent financial advisors. By aligning business strategy with personal financial goals, we help ensure that founders protect their wealth and secure their long-term financial legacy.
If you’d like to explore these strategies further, connect with MHA’s Head of FinTech, Kanika Mishra Pathak, via LinkedIn.
Visit our website to learn more about our tax (https://www.mha.co.uk/services/tax) and financial planning (mha.co.uk/services/wealth) services.
About the Authors
David Hume
Independent Financial Adviser, Chartered FCSI, Chartered Wealth Manager
David joined MHA in January 2023, but he has over 34 years of success in advising his clients on achieving their individual financial planning goals and aspirations. As a professionally qualified Financial Planner and Chartered Fellow of CISI, he is based in the London City offices of MHA.
He is experienced in looking after the financial affairs of personal clients, families, trusts, charities, and businesses. He has found that all of his clients are unique in their needs, and he aims to provide an unsurpassed service to become their trusted adviser. His specialisms include Wealth Structuring, Retirement Planning, IHT Mitigation Advice, Exit Strategy Planning and Protection for you and your family and/ or business.
Peter Carville
Tax Partner, Chartered Tax Adviser (CIOT)
Peter is a Tax Partner in the financial services team. He joined MHA in 2024, previously having worked at a big 4 firm. Peter has over 25 years’ experience in banking tax. He is a corporate tax specialist but drives delivery for all services to his client base. He has a hands-on approach to tax compliance and regularly engages with HMRC on disclosure and enquiry matters.
Peter works with a range of financial service institutions, including commercial and investment banks, challengers, exchanges and trading platforms. He has extensive in-bound international tax and business transformation experience. Peter’s tax technical experience includes advising on profit and capital attribution, bank taxes, withholding tax, SDRT, securitisations and treasury tax matters. He is a member of the Chartered Institute of Taxation.
Alison Conley
Retail & Consumer, Corporate and International Tax Partner
Alison is a Tax Partner who works across the UK and internationally with fund and asset management clients. Whether a new launch or an established business, she is able to provide structuring and ongoing advice that meets the needs of all stakeholders.
She has also provided specialist tax and business advisory services to a number of PE backed, entrepreneurial clients and consequently, has advised on many UK and cross-border transactions and deals.
Chris Blundell
Partner, CTA
Chris has almost 30 years experience in the field of tax advice having joined what was then the Inland Revenue from Manchester University via BT. Since then in his time at both KPMG and EY and now at MHA, he has worked with businesses large and small, listed and private, UK-based and international.
Chris has worked with companies and organisations in all sectors: large insurance companies, international technology companies, hotel and leisure companies, and construction companies to name a few. He heads up MHA’s national Human Capital Advisory team.
Chris advises his clients on all manner of UK and overseas taxes that affect them and their employees through their employment of staff, both senior and junior. Issues like share incentives, the operation of PAYE, the application of National Insurance, the Construction Industry Scheme, the implementation of Employee Ownership Trusts and the valuation of company shares for tax purposes are all familiar territory for him.
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