What an investment club is
An investment club is a group of people who put money into a shared pot and decide together what to invest in. HMRC describes the classic version as friends, neighbours or work colleagues buying and selling shares on the stock market. Each member owns part of the club's investments in proportion to what they have paid in, and the club's constitution and rules set out how decisions get made and how gains are divided.
The term is also used more loosely for groups of angel investors who meet regularly to hear pitches and back private companies. Some of these pool their money and invest as one, while others are closer to a network where members put in individually. The same name can cover quite different set-ups, and the club's own rules are what decide how it works in practice.
How an investment club differs from an angel network or syndicate
- In a club, the money is usually pooled and members decide as a group, so the club invests as one. In an angel network, each member decides and invests separately.
- An angel syndicate forms around a lead investor, often deal by deal. A club is a standing group with ongoing membership, and decisions are usually collective rather than led by one person.
- A VC fund is run by professional managers investing other people's money. An investment club is run by its own members, typically with a treasurer keeping the records.
- Clubs in HMRC's sense mostly hold listed shares. Networks, syndicates and VC funds back private, early-stage companies.
Investment clubs and UK tax rules
- A club is normally an unincorporated association. Because it holds investments on behalf of its members, it is generally outside Corporation Tax.
- Each member is taxed individually on their share of the club's income and gains, and can use their own allowances and reliefs against it.
- A member's share changes every time money is paid into or taken out of the club.
- Whoever runs the club, often the treasurer, gives each member a written statement of their gains and losses at the end of each tax year. HMRC provides an investment club certificate (form 185) for this.
- If a member moves shares they already own into the club, HMRC treats that as selling them.
