Key Takeaways
- HM Revenue & Customs (HMRC) published a tax information and impact note on 28 October 2026 setting out Budget 2026 changes to the Seed Enterprise Investment Scheme (SEIS), Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) rules.
- Five rule changes are planned, including partial EIS relief where an investment exceeds scheme limits, same-day SEIS and EIS or VCT investments, and protection from other investors' late payments.
- Higher EIS and VCT limits have applied since 6 April 2026: companies can raise up to £10 million a year, or £20 million if knowledge-intensive, up from £5 million and £10 million.
- The cumulative investment limit rose from £12 million to £24 million, and from £20 million to £40 million for knowledge-intensive companies.
- The gross assets test rose from £15 million to £30 million immediately before a share issue, and from £16 million to £35 million immediately afterwards.
- VCT income tax relief is 20% for holdings issued on or after 6 April 2026, down from 30%, while specified Northern Ireland companies keep the previous lower limits.
Five Scheme Changes Confirmed by HMRC
What do the Budget 2026 changes to the Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) mean for companies and investors? In this blog, we examine the note from HM Revenue & Customs (HMRC) and its implications for investors and companies.
On 28 October 2026, HMRC released the Budget 2026 tax information and impact note covering changes to the SEIS, EIS and Venture Capital Trust (VCT) rules. A tax information and impact note explains a tax measure and its expected impacts, but a separate note is not published for every Budget measure.
The five changes set out in the measure are:
- Where an investment exceeds the scheme limits, EIS tax relief will still be available for the part of the investment within those limits.
- SEIS and EIS investments, or SEIS and VCT investments, can take place on the same day.
- If one or more investors pay late, the tax relief available to the other investors will no longer be affected.
- The SEIS interest rules that apply when relief is withdrawn or reduced will be brought into line with the equivalent EIS rules.
- VCT rules will be updated so that any withdrawal of Income Tax relief is computed using the rate in force when the shares were issued.
The first four changes are due to apply from 6 April 2027 to relevant new share issues or VCT investments. The proposed VCT withdrawal amendment will apply to disposals of shares issued on or after 6 April 2026. For companies and investors, the direction of travel is positive: the changes remove technical barriers at a time when the government is looking to increase investment through the schemes.
How Much Can Companies Raise Under the New EIS and VCT Limits?
The Budget 2026 changes build on substantial increases to the EIS and VCT limits announced at Budget 2025 and legislated in the Finance Act 2026. The new limits have applied since 6 April 2026. Companies can now raise up to £10 million of risk finance investment in a 12-month period, double the previous £5 million, and knowledge-intensive companies can raise up to £20 million, up from £10 million.
The ceiling on total risk finance investments rose from £12 million to £24 million, and from £20 million to £40 million for knowledge-intensive companies. The gross assets test also increased. Gross assets must not exceed £30 million before the relevant share issue and £35 million immediately afterwards. The previous thresholds were £15 million and £16 million respectively. The same figures apply to companies qualifying under the VCT scheme.
The Institute of Chartered Accountants in England and Wales (ICAEW) has set out the same increases in its guidance for 2026/27. One carve-out deserves attention. Specified Northern Ireland companies keep the previous limits. They have a registered office in Northern Ireland and trade in goods or carry out specified electricity activities. Those activities include generation, transmission, distribution, supply, wholesale and cross-border exchange. Their limits remain £5 million a year and £12 million overall. For knowledge-intensive companies, the limits are £10 million and £20 million respectively.
What Do the Changes Mean for Investors and Growing Companies?
Each change addresses a distinct point of risk. At present, an EIS investment that exceeds the applicable limits can put tax relief at risk for the whole amount. Under the new approach, relief will be protected for the portion of the investment within the scheme's limits. This safeguard matters now that eligible companies can raise up to £10 million in a single year.
The same-day change addresses the current restriction on a company receiving EIS or VCT investment on the day it issues SEIS shares. Once the change is in force, an investor can make SEIS and EIS investments on the same day. A company will also be able to issue SEIS shares on the same day that a VCT invests in it, without that timing alone affecting eligibility for relief. This removes the need to stagger completion dates across a funding round.
The late-payment provision points the same way. Where one investor in a round delays payment, the tax position of the other investors will no longer be affected. For angel networks and syndicate deals, that removes a real source of uncertainty at closing and should make smaller funding rounds simpler to complete. Aligning the SEIS interest rules with EIS completes the clean-up, giving both schemes a consistent basis when relief is withdrawn or reduced.
How Should Companies Prepare for the VCT Changes?
The VCT rate change is already in force. For relevant holdings issued on or after 6 April 2026, VCT income tax relief stands at 20%, down from 30%, following amendments made by the Finance Act 2026. The Budget 2026 measure proposes a change to withdrawals of Income Tax relief. The calculation will use the rate that applied when the shares were issued. This keeps the calculation tied to the relief originally given.
Companies raising funds under the schemes should confirm eligibility before each share issue. They should also monitor gross assets around the funding round. They need to check whether the knowledge-intensive or Northern Ireland limits apply. Founders who are setting up a business in the UK often plan a SEIS round first and move on to EIS as the company grows, so these sequencing changes are worth tracking early.
At 3E Accounting UK, we help clients review scheme eligibility, structure qualifying share issues and keep company records in order as the new rules bed in. Contact us to discuss your plans.
Frequently Asked Questions
The increased limits have applied since 6 April 2026. Companies can raise up to £10 million of risk finance investment in a 12-month period, and knowledge-intensive companies up to £20 million, with cumulative limits of £24 million and £40 million respectively.
VCT income tax relief is 20% for relevant holdings issued on or after 6 April 2026, reduced from 30%. Under the Budget 2026 changes, any withdrawal of relief will be calculated using the rate that applied when the shares were issued.
They cover relief where an investment exceeds scheme limits, same-day SEIS and EIS or VCT investments, protection from other investors' late payments, aligned SEIS interest rules, and the calculation rate for withdrawn VCT relief.
The higher limits apply to eligible Northern Ireland companies that are not specified companies. Specified Northern Ireland companies have a registered office in Northern Ireland and trade in goods or carry out specified electricity activities. They keep the previous limits: £5 million a year and £12 million in total, or £10 million and £20 million if knowledge-intensive.
EIS relief will remain available on the part of an investment that is within the scheme limits, so exceeding a limit no longer puts the qualifying portion of an investment at risk.
