Will Clark, Head of Business Development in
28 October 2026
Entrepreneurship and growth companies featured prominently in the Chancellor’s Budget, with measures spanning investment, access to finance and employee ownership. For EIS, SEIS and VCTs, the announcements focused on simplifying the schemes and providing greater certainty for investors and businesses raising capital.
Alongside the scheme changes, the Budget announced wider measures covering growth finance, employee share schemes and the taxation of business founders. The government also published its response to the Tax Support for Entrepreneurs call for evidence, setting out its approach to the schemes and identifying areas for legislative change and clearer guidance.
This article sets out what was announced, when the changes take effect, and what they mean for founders raising investment and for investors in EIS, SEIS and VCTs.
Changes to how the schemes operate
The government announced several technical changes intended to simplify administration and reduce the consequences of certain timing issues and technical breaches.
For EIS, exceeding an investment limit will no longer automatically result in all tax relief being lost. For SEIS, investment will be able to take place on the same day as EIS or VCT investment, and the rules on interest charged when relief is withdrawn or reduced will be aligned with the equivalent EIS rules.
In funding rounds, one investor’s late payment will no longer affect the tax relief available to other investors. For VCTs, any withdrawal of income-tax relief will be calculated using the rate that applied when the shares were issued.
Most of these changes will apply to share issues from 6 April 2027. The VCT relief withdrawal amendment will cover relevant disposals of shares issued from 6 April 2026.
As Philip Hare & Associates notes in its Budget briefing, the changes address practical difficulties that can arise when companies issue shares. The detailed legislation will determine how they operate, and companies will still need to meet the other qualifying conditions.
Worth noting
What hasn’t changed
The announcements do not introduce a new change to the headline upfront income-tax relief rates for EIS, SEIS or VCTs.
The government has also not proposed extending company age limits or HMRC's general six-month longstop expectation for Advance Subscription Agreement and it is not introducing fee caps.
Advance Assurance and clearer guidance
HMRC will work with industry to explore improvements to its Advance Assurance service for SEIS and EIS companies. The government’s stated aim is to make the process simpler, quicker and easier to navigate, including considering how routine applications can be handled more efficiently.
Advance Assurance can provide prospective investors with information about whether a company and proposed share issue are likely to meet specified scheme conditions. It does not assess investment performance or guarantee an individual investor’s eligibility for relief.
The government also plans clearer guidance on company age limits and Advance Subscription Agreements (ASAs). It has not proposed extending company age limits or the existing six-month ASA longstop period.
Raising awareness of EIS capital gains deferral
The government’s response includes a commitment to improve awareness of the existing EIS Capital Gains Tax (CGT) deferral relief.
Subject to the relevant conditions, investors can defer a gain by reinvesting it into qualifying EIS shares. This may be relevant following the sale of a business, property or another asset.
The government acknowledges that awareness of these reliefs remains too low. It will improve guidance to help founders and investors understand when the reliefs are available, how they work and how to claim them.
CGT deferral postpones a tax liability rather than automatically eliminating it. Its relevance depends on the investor’s circumstances and the conditions attached to the investment.
Fees, transparency and the use of investment capital
The government’s response recognises the role of EIS, SEIS and VCTs in helping innovative businesses access risk capital and grow. It also considers how effectively that capital reaches the businesses the schemes are intended to support.
HMRC will strengthen guidance and compliance activity around arrangements that divert an undue proportion of EIS and SEIS capital through fundraising fees, intermediary charges or similar structures.
The government does not propose introducing fee caps. Instead, it will work with industry and the Financial Conduct Authority to explore greater transparency and comparability of fees and investment terms.
The response also identifies the use of tax-supported investment for overseas activity as an area it will monitor.
Wider measures for founders and scaling businesses
Beyond the venture capital schemes, the Budget announced additional British Business Bank capacity and changes to employee share schemes intended to support access to finance and talent.
The proposed Founders’ Relief would provide a 10% CGT rate on up to £10 million of lifetime qualifying gains, applying to qualifying disposals from 6 April 2027. The relief is aimed at founders and significant early investors in businesses with a demonstrated record of growth and innovation. Its detailed eligibility conditions remain subject to technical consultation, which closes on 30 November 2026.
The Budget also announced a reduction in the Business Asset Disposal Relief lifetime limit from £1 million to £500,000 from 6 April 2027.
What this means for investors
The EIS, VCT and SEIS announcements focus primarily on the operation and administration of the schemes. They do not introduce a new change to their headline upfront income-tax relief rates.
For investors, the proposed simplifications and clearer guidance may reduce some areas of uncertainty. Investment decisions will continue to depend on individual circumstances, the quality of the underlying businesses, the manager’s approach, fees and the risks involved.
Further detail will emerge through Finance Bill 2026–27 and subsequent HMRC guidance.
Related resources
If you are raising investment or considering EIS and VCTs, these may be useful next.
Frequently asked questions
Quick answers on what the Budget means for EIS, SEIS and VCTs.
Important information
EIS, SEIS and VCT investments are high risk and may be difficult to sell. Investors could lose all their capital. Tax relief depends on individual circumstances and qualifying conditions, and tax rules may change. This article provides general information and does not constitute investment or tax advice.
Sources: HM Treasury’s Budget document, Tax Support for Entrepreneurs government response, Founders’ Relief technical consultation and Philip Hare & Associates’ Budget briefing.