EIS and VCT funding can help UK growth companies access scale-up capital from investors who are actively looking to back qualifying private businesses. For founders, the practical question is not just whether tax relief is available to investors. It is whether the round can be structured in a way that works commercially and technically.
Share rights, instrument choice, use of funds, historic fundraising, investor participation and timing can all impact EIS/VCT eligibility. These points are easier to address before investor outreach than during legal completion.
This guide explains the main founder considerations, the practical differences between EIS and VCT funding, the key limits from 6 April 2026, and what to prepare before speaking to investors or advisers. It reflects HMRC guidance and legislation in force as at 8 June 2026.
What is EIS & VCT?
The Enterprise Investment Scheme, known as EIS, and Venture Capital Trusts, known as VCTs, are UK government-backed structures designed to encourage investment into smaller, higher-growth companies. Both can support company fundraising, but their fund structures are different.
EIS
Direct investment into the company
EIS investors usually subscribe directly, or through an EIS fund or nominee entity, for newly issued shares in a qualifying company.
VCT
Investment through a listed trust
VCT investors subscribe into a listed VCT. The VCT then invests from that pool of capital into qualifying portfolio companies.
Important
This article is a general founder guide and is not tax or legal advice. EIS and VCT eligibility is technical. Companies and investors should take specialist advice before considering an EIS/VCT funding round.
Where eligibility affects your round
Founders do not need to become tax specialists. They should, however, know the main points that can affect round design before terms are agreed and engage a specialist tax adviser.
01
Share rights
Avoid agreeing preference, redemption or downside protection terms before checking whether they work for EIS and VCT relief.
02
Instrument choice
EIS needs qualifying shares. VCTs may have more flexibility, including certain securities or loans.
03
Use of funds
Be clear how the money supports growth. Debt repayment, acquisitions or shareholder exits would cause issues.
04
Company history
Previous SEIS, EIS, VCT or other risk finance investment affect annual and lifetime limits.
05
Investor relationships
Existing shareholders, directors, employees, consultants, lenders or related parties may need to be checked.
06
Timing
Advance assurance, share issue timing, receipt of funds and use of money all matter.
Practical point
If an investor asks for unusual rights, a loan note or a redemption feature, check the EIS/VCT position before the term sheet is signed.
EIS vs VCT at a glance for founders
EIS and VCT funding are often discussed together, but founders should not treat them as identical. The company rules overlap, but the investment route and instrument flexibility can differ.
| Founder question | EIS | VCT |
|---|---|---|
| How does capital reach the company? | Investors usually subscribe directly, or through an EIS fund or nominee, for shares in the company. | Investors subscribe into a VCT. The VCT then invests into qualifying portfolio companies. |
| What instruments can be used? | EIS relief generally requires newly issued qualifying shares, paid up in cash. | A VCT qualifying holding can include eligible shares and certain securities or loans, subject to VCT rules. |
| Can the round include loan notes? | Not for EIS investors. EIS is focused on qualifying shares rather than debt-style instruments. | Potentially, yes. VCTs may use certain loan or security instruments, but terms still need to comply with the rules. |
| Can both invest in the same round? | Often, yes, provided the share issue and investor position work for EIS. | Often, yes, provided the VCT's qualifying holding requirements are met. |
| How patient can the capital be? | EIS investors generally need to hold their shares for at least three years to retain income tax relief, and usually seek liquidity after the third year. | VCTs are able to exit within three years without negative tax consequences. VCTs can often be long-term investors in portfolio companies but will still be seeking exit routes. |
Useful sources: GOV.UK EIS guidance, GOV.UK venture capital schemes guidance and HMRC guidance on VCT qualifying holdings.
Key EIS and VCT limits from 6 April 2026
Several EIS and VCT company limits changed for investments made on or after 6 April 2026. The higher limits are useful for growth companies, but founders still need to check previous funding, age, assets, employees and whether any exception applies.
The table below is a starting point only. It does not cover every condition, but it highlights the limits most likely to affect whether a growth round can qualify.
| Limit | Standard company | Knowledge-intensive company |
|---|---|---|
| Annual relevant investment limit | Up to £10m in any 12-month period for most companies. | Up to £20m in any 12-month period for most companies. |
| Lifetime relevant investment limit | Up to £24m over the company's lifetime for most companies. | Up to £40m over the company's lifetime for most companies. |
| Gross assets immediately before investment | Up to £30m for most companies. | Up to £30m for most companies. |
| Gross assets immediately after investment | Up to £35m for most companies. | Up to £35m for most companies. |
| Employee limit | Fewer than 250 full-time equivalent employees. | Fewer than 500 full-time equivalent employees. |
| Basic age limit | Usually seven years from first commercial sale. | Usually ten years from first commercial sale, with specific knowledge-intensive rules. |
Source: GOV.UK policy paper on EIS and VCT changes, HMRC Venture Capital Schemes Manual and GOV.UK guidance on specified companies, checked on 8 June 2026. Some specified companies remain subject to previous limits.
What founders should prepare
A good fundraising process separates two questions: can the round qualify, and is the business attractive enough for scale-up investment? Founders should be ready to discuss both.
Eligibility materials
Can the round qualify?
✓ Company and group structure
✓ Articles and share rights
✓ Cap table and investor relationships
✓ Previous SEIS, EIS, VCT or other risk finance
✓ Gross assets and employee numbers
✓ Proposed use of funds and round terms
Commercial materials
Can the business scale?
✓ Pitch deck
✓ Historical financials
✓ Forecast model
✓ KPI data
✓ Customer and market evidence
✓ Clear growth plan and use of funds
For more on investor readiness, read What We Look For at Series A and our VC Term Sheet Guide 2026.
How Guinness Ventures approaches EIS and VCT investment
Guinness Ventures invests in UK growth companies through EIS and VCT strategies. We are a generalist investor, with experience across consumer, business services and healthcare.
We look for real-world businesses with evidence of demand, clear customer value and the potential to scale efficiently. Eligibility matters, but it is not a substitute for a strong investment case.
We are most relevant for companies with proven traction, typically at least £1m of revenue, and a clear plan for using growth capital. We see this as being the "Series A" stage, see here for how we think about this: What Does Series A Mean To Us?
You can read more about our current investment criteria on our Seeking Investment page.
Need specialist EIS or VCT advice?
Eligibility is technical. If you are preparing a funding round and would like an introduction to experienced EIS or VCT advisers, we may be able to point you in the right direction.
Related resources
If you are assessing investor fit or preparing for a raise, these pages may be useful next.
Frequently asked questions
Specific questions founders often raise when EIS or VCT funding is relevant to a growth round.
Get in touch
If you are a founder raising growth capital and believe your company may be suitable for EIS or VCT investment, Guinness Ventures would be pleased to hear from you.