Syndicated deals need somewhere for the money to sit. A founder taking forty angels individually would need forty entries on the share register and forty signatures on every future document, so the group invests through one vehicle instead.
A bare trust SPV is the usual UK answer, and it is the only one of the three available that keeps SEIS and EIS relief with your investors. The others are a limited company SPV and a Delaware Series LP, each right in narrow circumstances. What they really decide is who owns the shares and who can sell them, which surfaces years later.
What a Bare Trust SPV Is, and What It Is Not
A bare trust SPV is a setup where a nominee company holds a startup's shares in its name, but each investor still owns their share of the investment.
The term "bare" refers to the trustee's lack of power. The trustee cannot vote the shares, choose who gets what, or make decisions about the asset. Its only job is to appear as the registered owner.
With this arrangement, the startup's share register shows just one entry, but forty investors may each own their own shares underneath. The money isn't pooled, and each investor's share is clearly theirs.
There are 3 common misunderstandings about what a bare trust SPV is not.
1. It is not a fund. A bare trust is not a Collective Investment Scheme, an Alternative Investment Fund, or an investment entity. 2. It is not a new company. This arrangement doesn't create a new company. 3. It is also not the family arrangement you might find when searching for this term. Parents sometimes use a bare trust to hold money for a child, but that is a different use.
The deed, the register entry, and the steps of the deal are all part of the UK bare trust SPV. This page will help you decide if this structure is right for your syndicate.
The Three Structures a UK Syndicate Can Choose
There are actually three practical options, but most syndicate leads only hear about one.
The options are:
- A bare trust SPV with a nominee as the registered shareholder
- A limited company SPV where a new company buys the shares
- A Delaware Series LP for deals focused on the US
| Bare trust SPV | Limited company SPV | Delaware Series LP | |
|---|---|---|---|
| What investors own | The beneficial interest in the startup's shares | Shares in the SPV | An interest in a series |
| Who holds the money | A custodian's ring-fenced client money account | The company's own bank account | The series' account |
| Who decides an exit | A majority vote of the investors | The SPV's directors, under its articles | The sponsor, with no investor vote |
| S/EIS relief | Preserved for eligible UK investors | Generally lost, since the company is the subscriber | Not applicable |
| Tax reporting | Transparent, nothing owed at trust level, each investor reports their own | The company is a taxpayer in its own right | US partnership reporting, with K-1s |
| Investor eligibility | UK Sophisticated Investors and High-Net-Worth Individuals, mixed international base possible | Same, plus company law obligations | US-oriented |
| Reuse across deals | Same nominee again, each deal ring-fenced | A new company each time in practice | A new series each time |
| Time to launch | Hours | Weeks, once incorporation and banking are done | Days |
For most UK syndicates, the choice between an SPV vs a limited company becomes clear after reading the S/EIS rules. Using a company SPV doesn't just complicate the relief. It removes it entirely, since the company, not the individuals, is the subscriber.
A company SPV does offer standard corporate control, as directors follow the company's articles instead of consulting with investors. Odin's SPV uses the bare trust model, while the Delaware Series LP is the US option. There is no LLC option.
Which Structure Fits Your Deal
Most Odin deals still use the bare trust. There's nothing to register and nothing new to set up. It's just another sub-trust added to the same nominee that's already in place.
A limited company SPV is used for a specific type of deal, and speed isn't the only reason. Imagine a syndicate three years after closing, with a trade sale coming up, and the buyer's lawyer wants shareholders listed on a regular register instead of behind a nominee. Registration takes a few weeks, and so does opening a bank account for the company. No one picks this option for a deal that needs to close by Friday. But if the deal was never moving quickly, waiting three weeks doesn't make a difference.
A K-1 form is a clear sign that a US investor has signed the term sheet. SEIS was never an option for them, so using a Delaware Series LP doesn't affect a UK investor's relief. The main difference is in voting: the sponsor decides when to exit, with no need for a majority or a ballot. If a sponsor already runs an umbrella fund, they can set up a new series in just a few days.
Who Owns What, and Who Holds the Money
People often mix up two questions, but everything becomes clear once you separate them.
The first question is who is on the register, and the second is who owns the asset.
The register lists a nominee shareholder as a single entry, regardless of how many investors are involved. This nominee is the legal owner but cannot make decisions about the shares.
You are the beneficial owner, not of a unit in a fund or a share of a pool, but of your own shares in the startup. You confirm this by signing a declaration of trust, which names you as the person for whom the nominee holds the shares.
And that's exactly why a nominee structure is not considered a fund. A bare trust is not a Collective Investment Scheme, an Alternative Investment Fund, or an investment entity.
The money is a separate issue. It is kept in a ring-fenced client account managed by Thompson Taraz, who also controls the payment mandate. This setup means no one party can move the funds alone. Odin is currently applying to manage custody in-house.
Responsibilities are split in a similar way. Odin handles vehicle administration. The sponsor selects, manages, and is accountable for the deal. Odin doesn't give advice, perform due diligence, or offer investment opinions.
Who Decides an Exit
This difference often catches leads off guard, and it usually comes up only when things are going well.
When an acquirer shows interest, a bare trust setup means a big event like a sale needs a majority vote from the investors. In a Delaware Series LP, the sponsor decides on the exit without asking the investors.
Neither is a design preference. The reason is regulatory.
If a UK sponsor has full control over other people's assets, it counts as fund management, and getting the right permissions can take six to twelve months. By default, a bare trust avoids this by keeping decisions collective. This approach keeps the vehicle outside full fund management regulation.
This exchange is straightforward. You get a structure that can launch in hours and has no ongoing costs, but you give up sole control right when it might matter most.
Where It Bites
For example, a secondary sale where a buyer wants only part of the position, a follow-on that needs the current holding changed, or an acquirer who needs a signature by Friday.
In each of these cases, you need to talk with your investors instead of making the decision alone. Leads who have been through this before plan for the vote ahead of time, instead of being surprised during the deal.
If you are wondering whether doing deals often and charging fees changes your regulatory status, that is a different issue. The FCA article covers it in detail.
Carry is also affected, because the event that triggers it is the same one that needs a vote. The details of how carried interest is calculated are explained separately.
Tax and S/EIS in One Place
The bare trust is transparent, which is a short sentence doing a lot of work.
There is no tax owed at the trust level. The vehicle itself does not pay taxes, so your return is not reduced by an extra layer of tax between the company and you.
The bare trust capital gains tax is calculated as if you own the asset directly, and the trustee is not considered. You can use your annual exemption, and you report the sale on your own tax return.
Income is treated the same way. It goes to the beneficiary, not the trust.
This transparency also keeps S/EIS relief in place. Since you are seen as the owner of the shares, the nominee does not break your connection to the company.
For UK deals, the EIS and SEIS certificates are given out after the company files with HMRC. Having non-UK investors in the same vehicle does not affect the eligibility of those claiming relief.
Bare trusts do not use K-1 forms, since these do not apply to this type of vehicle. K-1 reporting is only relevant for the Delaware structure.
Note: This is not tax advice. You should check your own situation with an accountant.
Many Deals Through One Vehicle
Most guides focus on the first deal. It's the later ones, like the second, fifth, or twelfth, where your chosen structure really starts to make things easier or harder.
With a bare trust, you use the same nominee entity for every deal. You don't need to set up a new company, open a new bank account, or get a new company number each time.
Each deal becomes its own separate sub-trust. Assets stay within their own deal, so creditors or investors from one deal can't access another's. Each investor's cash and shares are kept in separate sub-accounts.
That's why you can launch in hours instead of weeks. Since there's no new entity to set up, you only need to handle the deal's paperwork.
With a company SPV, each new deal means another company to incorporate, another bank account, more filings, and ongoing annual obligations, even after the deal is finished.
Fees work the same way. They're charged once at closing as a percentage of the amount raised, with set minimums and maximums. There's no setup or recurring fee, and you choose who pays when you set up the vehicle.
If you plan to do this often, check out the guide on starting an angel syndicate for your responsibilities.
What to choose?
- Choose a bare trust SPV if your investors are UK taxpayers looking for S/EIS relief, if you want deals to go live quickly, and if you're okay with needing a majority vote to sell. This is usually the best choice for UK angel syndicates, which is why most use it.
- Choose a limited company SPV if you want directors to make decisions without checking with investors. This is especially when tax relief isn't important for your group.
- Choose a Delaware Series LP if the deal, company, or investors are based in the US, and you need the sponsor to have full control at exit, not just as a compromise.
- Choose a fund if you're following a strategy instead of doing single deals, and you want control over what to buy and when to sell. This is a different product with its own rules, and Odin's fund is the place to start that discussion.
FAQs
What are the downsides of a bare trust?
There's no discretion. The beneficiary fully owns the asset and can claim it at any time, so the trustee can't manage, hold back, or redirect anything. In a syndicate, the group makes exit decisions together. In a family setting, a child gets their entitlement at 18.
What is the difference between a trust and a bare trust?
Most trusts let trustees choose who benefits and when. A bare trust doesn't allow any choices. The best comparison is with a discretionary trust, which lets trustees decide, while a bare trust is designed to prevent that.
Who owns the property in a bare trust?
The beneficiary owns the property. The trustee just holds the legal title, which is what shows up on registers or title deeds. Here, ownership and the name on the paperwork are separate, and that's the key point.
Does a bare trust have to be registered with HMRC?
There isn't a general exclusion for bare trusts, so most express bare trusts need to register with the Trust Registration Service, except for a few specific cases. If you're using a syndicate vehicle, check with the administrator instead of assuming.
Does a bare trust avoid inheritance tax?
No, because the beneficiary is seen as owning the assets; they're part of that person's estate. Putting assets into a bare trust is treated like giving a gift to the beneficiary.
What are the disadvantages of leaving a property in a trust?
The main issues are cost, reporting, and the fact that it can't be reversed, along with ongoing trustee duties. This is more of a family or estate planning issue, and these kinds of bare trust property setups are quite different from holding shares for a deal.
