However, they are considered to be extremely risky investments, and some experts say they may not be good for a lot of people, as the risks can outweigh the tax advantages.

Mr Connolly says: “There is a strong argument for including smaller company shares in your investment portfolio.

“They are usually more dynamic and have greater growth potential than larger firms, which are often at the consolidation stage of their development.

“However, there are greater risks involved with smaller companies.

“Not only are they usually less secure than larger firms with less financial backing, but their shares are more illiquid with fewer people willing to buy them when times are difficult. This means it can be difficult to sell when you want and at the price you want.” 

Woodlands

Profits from woodlands run on a commercial basis are free from income tax and exempt from CGT. There can also be some IHT benefits.

But Mr Connolly says: “However, these investments are only suitable for wealthy individuals because of the high costs involved.”

Melanie Tringham is deputy features editor of Financial Adviser and FTAdviser.com