If you are raising a UK venture fund and you are not thinking about EIS, SEIS, and VCT eligibility, you are leaving money on the table. Your investors' money, specifically. These three tax relief schemes directly affect how much of an investor's capital actually goes to work versus going to HMRC. For UK-based high-net-worth individuals and family offices, the difference between an EIS-qualifying and non-qualifying investment can be the difference between committing and passing.
Here is what each scheme does, what changed in April 2026, and how emerging fund managers should think about structuring around them.
Enterprise Investment Scheme (EIS)
EIS is the big one. It gives individual investors 30% income tax relief on investments of up to GBP 1 million per year in qualifying companies [1][2]. If an investor puts GBP 100,000 into an EIS-qualifying company, they get GBP 30,000 back from HMRC as a reduction in their income tax bill. On top of that, if they hold the shares for at least three years, any capital gain on disposal is completely exempt from CGT [2].
The relief can also be carried back to the previous tax year, which gives investors flexibility in managing their tax position. And if the investment fails, loss relief is available: the investor can offset the loss (net of the income tax relief already received) against their income or capital gains.
For a qualifying company to be eligible, it must be an unquoted trading company (AIM-listed counts as unquoted for these purposes), have fewer than 250 full-time equivalent employees, and have gross assets below certain thresholds [1]. It cannot be operating in excluded sectors like financial services, property development, legal services, or farming.
Seed Enterprise Investment Scheme (SEIS)
SEIS targets the earliest stage. The income tax relief rate is 50% (the most generous of the three schemes) on investments of up to GBP 200,000 per year [2]. The company must have gross assets of no more than GBP 350,000, fewer than 25 employees, and must have been trading for less than three years.
The maximum a company can raise under SEIS is GBP 250,000 in total [2]. After that, it can move to EIS funding. The transition from SEIS to EIS eligibility is something managers investing at the pre-seed and seed stage need to track carefully, because getting the sequencing wrong can jeopardise relief for both sets of investors.
Like EIS, SEIS provides full CGT exemption on gains after a three-year holding period, plus loss relief if things do not work out. The 50% upfront relief means SEIS investments have a built-in downside cushion for investors, since even a total loss is partially offset by the tax relief already received.
Venture Capital Trusts (VCTs)
VCTs work differently. They are listed investment companies that invest in a portfolio of qualifying smaller companies. Individual investors get 30% income tax relief on investments up to GBP 200,000 per year, dividends from VCT shares are tax-free, and capital gains on disposal of VCT shares are exempt from CGT [2].
VCTs are managed by professional VCT operators and provide diversified exposure to venture-stage companies. They are more relevant to retail investors who want managed exposure rather than direct investment. For fund managers, VCTs are less directly relevant to fund structuring, but understanding them matters because they compete for the same investor capital -- particularly from HNW individuals who are deciding between backing your fund directly (potentially through EIS) or investing through a VCT instead.
What changed in April 2026
The April 2026 changes are significant, and they mostly work in favour of venture fund managers [2].
EIS thresholds expanded substantially. The company gross assets threshold has increased from GBP 15 million to GBP 30 million (post-investment limit from GBP 16 million to GBP 35 million). The annual investment cap has doubled: from GBP 5 million to GBP 10 million for standard companies, and from GBP 10 million to GBP 20 million for knowledge-intensive companies [2].
This is a big deal. It means larger growth-stage companies now qualify for EIS funding. If your fund invests in Series A or Series B companies that were previously too large for EIS, some of those may now be eligible. That changes your fundraising pitch to UK investors in a real way.
VCT relief rate reduced. Income tax relief for VCT investments dropped from 30% to 20% [2]. The CGT and dividend exemptions remain, so VCTs are still attractive, but the reduced upfront relief tilts the playing field slightly toward direct EIS investment. For emerging managers competing with VCTs for HNW capital, this is helpful.
SEIS unchanged. The SEIS parameters remain at 50% relief on up to GBP 200,000. No changes to company eligibility thresholds. This stability is welcome. SEIS continues to be the most powerful tax incentive for very early-stage investing in the UK.
How this affects fund structuring
Emerging managers can work these tax relief schemes into their fund strategy in a few different ways.
EIS-focused funds. Some managers structure entire funds around EIS eligibility. Every investment targets companies that qualify, investors claim EIS relief on their proportionate share of each investment, and the fund documentation is designed to facilitate the advance assurance and compliance reporting that HMRC requires. This approach works particularly well for funds investing in early-stage technology, life sciences, and knowledge-intensive companies.
Hybrid approaches. Other managers run funds where EIS eligibility is a factor in investment selection but not a hard constraint. You target qualifying companies where possible, but you do not pass on a strong investment simply because it does not qualify. The investor base for these funds tends to be a mix of tax-motivated HNWs and institutional capital that does not benefit from the reliefs.
SEIS top-up vehicles. For pre-seed managers, structuring a dedicated SEIS vehicle alongside or within your main fund can be attractive. The 50% relief rate is powerful enough to shift investor behaviour, and the GBP 250,000 company-level cap means SEIS works best as a supplementary vehicle rather than a primary fund strategy.
Qualification requirements to watch
HMRC publishes detailed guidance on which companies and activities qualify [1]. The exclusions matter. Your portfolio companies cannot be engaged in:
- Financial services, insurance, or banking
- Property development or land dealing
- Legal or accountancy services
- Farming, forestry, or fishing
- Hotels, nursing homes, or residential care
- Energy generation (with some exceptions for innovative technology)
The "trading company" requirement also means the company must be actively trading, not just holding investments or IP. Pre-revenue companies can qualify if they are preparing to trade, but HMRC applies scrutiny to companies that claim SEIS or EIS status without meaningful trading activity.
Advance assurance. Before investing, you can apply to HMRC for advance assurance that a specific company qualifies [1]. This is not mandatory, but most professional investors expect it. The process takes four to six weeks. Build it into your investment timeline.
The three-year hold. To preserve the CGT exemption (and to avoid clawback of income tax relief), shares must be held for at least three years from the date of issue. For VC funds with typical holding periods of five-plus years, this is rarely binding. But if you are running a faster-exit strategy, the three-year hold creates a floor on your investment timeline.
Common mistakes to avoid
I have seen fund managers lose EIS qualification for their investors through avoidable errors. Here are the ones that come up repeatedly.
Failing to track company eligibility over time. A company that qualifies at the point of investment can lose qualification status if its assets grow beyond the threshold, it enters an excluded trade, or its employee count exceeds the limit. The relief is claimed by the investor on their personal tax return, but if HMRC later determines the company was not qualifying, the relief is clawed back from the investor, not from you. That is a relationship-ending event.
Mixing qualifying and non-qualifying investments without clear documentation. If your fund holds both EIS-qualifying and non-qualifying investments, the investor-level reporting needs to clearly allocate each investor's capital between the two pools. Sloppy allocation creates tax return headaches and potential disputes.
Ignoring the "risk to capital" condition. HMRC introduced a requirement that the investment must carry genuine risk to the investor's capital and not be structured primarily to preserve capital. Structures with downside protection, guaranteed returns, or excessive security over company assets can fail this test. Your investment thesis needs to demonstrate genuine risk.
Timing the SEIS-to-EIS transition poorly. A company can raise SEIS funding before EIS, but the sequencing and timing matter. If you invest EIS money into a company before it has fully deployed its SEIS raise, you can jeopardise the earlier investors' SEIS relief. Get the compliance sequence right.
Fundraising implications
From a fundraising perspective, EIS and SEIS eligibility is one of the most effective differentiators you can have when pitching UK-based HNW individuals and family offices. A 30% (EIS) or 50% (SEIS) upfront tax rebate materially reduces the effective cost of the investment for your LPs. Combined with CGT exemption on gains, the risk-adjusted return profile improves considerably.
The expanded EIS thresholds from April 2026 open up a larger universe of qualifying companies, which means more managers can credibly market EIS eligibility. If you are launching a growth equity fund in 2026 or beyond, check whether your target investment size now falls within the new thresholds. It may well do.
Keep in mind that institutional investors (pension funds, fund-of-funds, corporate LPs) do not benefit from EIS or SEIS relief because they do not pay income tax or CGT in the same way individuals do. So if your LP base is primarily institutional, the reliefs are less relevant to your fundraising pitch. They become most powerful when your fund is raising from UK-based individuals, family offices, and angel networks.
How Infra One supports EIS and SEIS fund administration
We administer funds that invest in EIS- and SEIS-qualifying companies, and we handle the specific operational requirements these reliefs create. That includes tracking qualification status at the portfolio company level, producing the investor-level documentation needed for tax relief claims, coordinating with HMRC on advance assurance applications, and managing the compliance reporting through the life of each investment.
Our fund administration platform is built to handle the additional data requirements that EIS/SEIS funds generate: holding period tracking, qualification monitoring, and investor-level tax reporting. If you are planning a UK fund with a tax relief component, let's talk about how to set it up properly.
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