We are sharing this update from ACCA, our professional body, for the interest of clients and contacts. The content is (c) ACCA
Greater support for early-stage and scaling companies
The government has announced key changes to the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) regimes, set to take effect from 6 April 2026. These reforms are designed to provide greater support to early-stage and scaling companies, while ensuring that tax incentives remain targeted and sustainable.
One of the most significant updates is the increase in gross asset and investment limits for qualifying companies.
- Gross assets: companies can now have up to £30m before the issue of shares (previously £15m) and £35m after the issue (previously £16m).
- Annual investment limits: standard companies can raise £10m per year, up from £5m, while knowledge-intensive companies can raise £20m, double the previous limit.
- Lifetime investment limits: these have also doubled, with standard companies allowed £24m over their lifetime, and knowledge-intensive companies £40m.
These changes are intended to allow high-growth businesses to access more growth capital while remaining eligible for EIS or VCT relief.
VCT tax relief changes
The government is also reducing the upfront income tax relief for VCT investors from 30% to 20%. This adjustment aims to align the incentive more closely with EIS, which does not offer dividend relief, and to encourage VCT managers to focus on higher-growth investment opportunities.
It’s important to note that the increased limits do not apply to certain companies, including:
- companies registered in Northern Ireland
- companies trading in goods or electricity (including generation, transmission, distribution, supply, wholesale trade or cross-border exchange).
These companies will continue to operate under the existing scheme limits.
For businesses, the higher limits provide more room to raise capital under EIS and VCT, supporting ambitious growth plans. For investors, the lower VCT relief encourages a more targeted approach to high-growth opportunities, while still providing meaningful tax incentives.
As the changes come into effect in April 2026, early planning will be key for both companies and investors to maximise the benefits of the updated regimes.