We are increasingly asked whether the EIS and VCT new limits give growing companies more scope to raise tax-advantaged investments. The answer is yes, but the changes do not simply increase every allowance available to companies and investors.
From 6 April 2026, most qualifying companies can raise considerably more under the Enterprise Investment Scheme and through Venture Capital Trust investment. The company’s gross asset thresholds have also increased. However, the upfront income tax relief available to individuals investing in newly issued VCT shares has fallen from 30% to 20%.
Quick Answer
- Most qualifying companies can now raise up to £10 million in a rolling 12-month period, increased from £5 million.
- The standard lifetime investment limit has increased from £12 million to £24 million.
- Knowledge-intensive companies can raise up to £20 million annually and £40 million over their lifetime.
- The gross assets test is now £30 million before investment and £35 million immediately afterwards.
- VCT income tax relief has fallen from 30% to 20% for investments made from 6 April 2026.
- EIS income tax relief remains at 30%.
- Older limits continue to apply to certain Northern Ireland companies carrying on specified activities.
What Are the EIS and VCT New Limits From 6 April 2026?
The EIS and VCT new limits double the main annual and lifetime funding caps for most qualifying companies. They also increase the amount of gross assets a company may hold while remaining within the schemes.
| Company Test | Before 6 April 2026 | From 6 April 2026 |
| Standard annual investment limit | £5 million | £10 million |
| Knowledge-intensive annual limit | £10 million | £20 million |
| Standard lifetime investment limit | £12 million | £24 million |
| Knowledge-intensive lifetime limit | £20 million | £40 million |
| Gross assets immediately before investment | £15 million | £30 million |
| Gross assets immediately after investment | £16 million | £35 million |
These limits consider relevant risk finance investments received under EIS, VCT, SEIS and certain other forms of qualifying support. Amounts received by subsidiaries, former subsidiaries or businesses later acquired by the company may also need to be counted.
The limits are not separate pots for EIS and VCT funding. A company cannot raise £10 million through EIS and then treat a further £10 million of VCT-backed funding as falling outside the same annual limit.
Read: Reduce Capital Gains Tax With EIS, SEIS, VCT Tax Benefits
Which Companies Benefit From the EIS Changes in 2026?
Most UK growth companies that remain within the wider EIS qualifying conditions can benefit from the increased limits. The changes are particularly relevant to businesses that had reached, or were approaching, the former £5 million annual or £12 million lifetime caps.
A qualifying company may now have more room to
- complete a larger funding round
- raise follow-on finance from existing or new investors
- accept investment at a later stage of growth
- combine direct EIS investment with VCT-backed funding
- continue expansion after reaching the former lifetime ceiling
Example
Consider a qualifying technology company that had already received £11 million of relevant risk finance investment before April 2026.
Under the previous standard lifetime limit of £12 million, it would generally have had only £1 million of remaining headroom. Under the new £24 million lifetime limit, it may have significantly more capacity, provided the company and the new share issue satisfy all other conditions.
The increased cap does not automatically make a company eligible. Its trade, age, share structure, use of funds and risk-to-capital position must still meet the scheme rules. HMRC requires the company to have objectives to grow and develop over the long term, while the investment must expose the investor to a significant risk of capital loss.
How Do the New Limits Affect Knowledge-Intensive Companies?
A qualifying knowledge-intensive company can now receive up to £20 million in relevant investment during a rolling 12-month period and £40 million over its lifetime. These are twice the limits that generally applied before 6 April 2026.
Knowledge-intensive company status is intended for businesses carrying out substantial research, development or innovation. Additional tests apply, so a company does not qualify merely because it operates in technology, software or life sciences.
The increased limits may be particularly valuable for businesses with:
- long research and development periods;
- high product-development costs;
- substantial technical staffing requirements;
- delayed commercial income;
- repeated funding needs before profitability.
A company intending to rely on the higher limits should establish its status before presenting the investment as EIS or VCT qualifying. The relevant evidence may include expenditure records, employee qualifications, intellectual property ownership and details of the company’s innovation activities.
Read: Record VCT Fundraising and Tax Relief Changes
What Changed in the Gross Assets Test?
For most companies, gross assets must not exceed £30 million immediately before the investment and £35 million immediately afterwards. Before 6 April 2026, the equivalent limits were £15 million and £16 million.
The test is applied to the company or, where applicable, the relevant group. It is based on gross assets rather than net assets, so liabilities do not simply reduce the figure for this purpose.
The timing of the test matters:
- Immediately before the share issue: gross assets must not exceed £30 million.
- Immediately after the share issue: gross assets must not exceed £35 million.
A company with £29 million of gross assets before raising £5 million would have £34 million immediately afterwards, assuming no other balance-sheet movement. It may therefore remain within the increased asset thresholds.
By contrast, a company with £32 million of assets immediately before the issue would normally fail the first part of the test, even if it had significant liabilities.
Management accounts and an up-to-date balance sheet should be reviewed before the investment date. Relying only on the previous statutory accounts may produce the wrong answer where the company’s assets have changed materially.
Have the EIS Tax Reliefs Available to Investors Changed?
The main EIS income tax relief rate remains 30%, despite the higher company fundraising limits. An individual may generally claim relief on up to £1 million of EIS investment per tax year or up to £2 million where the amount above £1 million is invested in knowledge-intensive companies.
The tax reduction cannot exceed the investor’s UK income tax liability for the relevant year. Unused relief cannot be carried forward to a later tax year, although eligible EIS shares may be treated as issued in the preceding tax year, subject to that year’s limits and conditions.
EIS Investor Example
An investor subscribes £100,000 for qualifying EIS shares during 2026/27.
At 30%, the maximum initial income tax relief is:
£100,000 × 30% = £30,000
The investor must have sufficient income tax liability to use the full £30,000. The company and investor must also continue meeting the EIS requirements, including the relevant minimum holding period.
The increase in company funding limits does not increase the standard 30% relief rate or the general £1 million investor allowance.
What Are the Main VCT Income Tax Relief Changes in 2026?
The company-level funding and gross asset limits have increased, but the upfront VCT income tax relief rate has fallen to 20% for qualifying investments from 6 April 2026. The individual investment limit remains £200,000 per tax year.
The principal VCT investor position is now:
| VCT Rule | 2025/26 | From 2026/27 |
| Maximum annual investment qualifying for relief | £200,000 | £200,000 |
| Upfront income tax relief | 30% | 20% |
| Maximum potential initial relief | £60,000 | £40,000 |
| Tax treatment of qualifying VCT dividends | Tax-free | Tax-free |
| Capital Gains Tax on qualifying VCT disposals | Exempt | Exempt |
HMRC’s updated guidance confirms that investors can claim VCT relief on no more than £200,000 in a tax year and that the applicable rate is now 20%. VCT relief is available only for the tax year in which the qualifying investment is made; unlike EIS relief, it cannot be carried back to the previous year.
VCT Investor Example
An investor subscribes £100,000 for newly issued qualifying VCT shares during 2026/27.
The maximum upfront income tax relief is:
£100,000 × 20% = £20,000
Before 6 April 2026, an equivalent qualifying subscription could have generated relief of £30,000. The 2026 change therefore reduces the initial tax saving by £10,000 on a £100,000 investment.
The investor must still have enough UK income tax liability to absorb the relief and meet the required holding conditions.
Do the EIS and VCT Scheme Changes Apply to Every Company?
No. Certain companies registered in Northern Ireland continue to use the former annual, lifetime and gross asset limits. HMRC refers to these businesses as specified companies.
Broadly, a specified company is one whose registered office is in Northern Ireland and which carries on a trade involving:
- goods, generally including manufacturing rather than services; or
- specified wholesale electricity market activities, including generation, transmission or distribution.
For these companies, the standard annual limit remains £5 million, and the standard lifetime limit remains £12 million. A qualifying knowledge-intensive specified company retains the former £10 million annual and £20 million lifetime limits.
This exception exists because different subsidy control arrangements can apply to certain Northern Ireland activities. A Northern Ireland company should not assume that it qualifies for the higher limits simply because its investment takes place after 6 April 2026.
Do the Higher Limits Remove the Other EIS Eligibility Conditions?
No. The EIS changes 2026 increase selected financial thresholds but do not remove the wider qualifying conditions. A company must still satisfy requirements covering its trade, age, independence, use of funds and share issue.
The company will normally need to consider whether:
- it carries on a qualifying trade
- it has a permanent establishment in the UK
- it is not controlled by another company
- the shares are eligible ordinary shares
- the investment is made for genuine commercial reasons
- the funds will be used for qualifying business growth
- the money will be employed within the required period
- the company remains within the relevant employee limit
- the investment satisfies the risk-to-capital condition
- it is within the permitted period following its first commercial sale
For most companies, the initial investment must generally occur within seven years of the first commercial sale. Different provisions can apply to knowledge-intensive companies and to businesses raising finance for a new product or market under the relevant conditions.
EIS qualification is not a one-time test completed on the investment date. A later breach can lead to investors losing relief.
Also Read: Everything About R&D Tax Relief Advance Assurance For SMEs
Should a Company Apply for EIS Advance Assurance?
A company considering an EIS fundraising round should usually consider advance assurance before approaching investors, particularly where eligibility is not straightforward. Advance assurance gives HMRC an opportunity to consider whether specified conditions are likely to be met based on the information provided.
It is not a guarantee that investor relief will ultimately be available. HMRC makes clear that assurance addresses only certain conditions and is based on the facts included in the application.
A well-supported application will commonly include:
- a current business plan;
- financial forecasts;
- details of the proposed share issue;
- an explanation of how the funds will be used;
- the company’s group structure;
- information about previous risk finance investment;
- evidence of potential investors or a fund manager;
- details supporting knowledge-intensive status, where relevant.
Companies should also check how much relevant investment they and their subsidiaries have already received. Historical funding can count towards the new annual and lifetime limits.
Apex Accountants provides Enterprise Investment Scheme support for companies assessing eligibility, preparing advance assurance applications and completing post-investment compliance work.
What Should Companies Do Before Using the Higher Limits?
A company should complete a documented eligibility review before describing a funding round as EIS or VCT qualifying. The new thresholds create more funding capacity, but errors elsewhere can still put investor relief at risk.
The review should cover four main areas.
1. Recalculate Previous Risk Finance Investment
Compile all relevant amounts received by:
- the company;
- current subsidiaries;
- relevant former subsidiaries;
- acquired businesses whose previous funding may count;
- group companies that employed risk finance money in the qualifying trade.
The calculation should cover both the rolling 12-month limit and the lifetime limit.
2. Test Gross Assets at the Correct Time
Prepare reliable financial information immediately before the proposed share issue. Then model the company’s gross assets immediately after receiving the investment.
3. Review the Use of Funds
The investment must support qualifying growth and development. Companies should document how the money will be spent and connect it to the forecasts and business plan.
4. Protect Post-Investment Compliance
The company should monitor changes involving:
- share capital;
- investor rights;
- subsidiaries;
- trading activities;
- use of funds;
- payments or benefits to investors;
- company acquisitions or disposals.
Post-investment actions can affect relief even when the company qualified on the original issue date.
Frequently Asked Questions
Did EIS income tax relief fall to 20% in April 2026?
No. EIS income tax relief remains at 30% for qualifying investments. It is VCT upfront income tax relief that fell from 30% to 20% for investments made from 6 April 2026.
Can a company that reached the old £12 million EIS limit raise more?
Potentially, yes. A qualifying company that is not a specified Northern Ireland company may now have a lifetime limit of £24 million, or £40 million if it qualifies as knowledge-intensive. Previous relevant investment still counts, and all other EIS conditions must be satisfied.
Is the £10 million limit based on the tax year?
No. The company annual funding limit operates over a rolling 12-month period, not simply from 6 April to 5 April. Companies must therefore examine relevant investment received during the 12 months surrounding the proposed funding.
Can an investor put £2 million into an ordinary EIS company?
An investor can claim EIS relief on up to £2 million in a tax year only where at least £1 million is invested in knowledge-intensive companies. The general limit for investments not qualifying under the knowledge-intensive rules remains £1 million.
Do the new limits apply to SEIS?
The April 2026 increases discussed here apply to company limits under EIS and VCT. SEIS continues to have its own rules and thresholds, including a maximum qualifying investor subscription of £200,000 per tax year and separate company fundraising limits.
Does HMRC advance assurance guarantee EIS tax relief?
No. Advance assurance is based on the information supplied and covers only specified scheme conditions. Final relief also depends on the actual share issue, the investor’s circumstances and continued compliance after the investment.
How Can Apex Accountants Help With an EIS Funding Round?
The higher limits give qualifying growth companies more scope to raise tax-advantaged finance, but the additional headroom does not reduce the importance of a complete eligibility review.
Apex Accountants can assess previous risk finance funding, review the gross assets test, prepare financial forecasts and support an EIS advance assurance application. We can also assist with the post-investment compliance statement required before qualifying investors receive their EIS certificates.
For companies planning a new round under the EIS and VCT scheme changes, the next sensible step is to review eligibility before finalising investment terms. Book a consultation with Apex Accountants to discuss the proposed funding structure.
