UK Autumn Budget 2025: What EIS, SEIS and VCT changes mean for founders and angel investors

The UK Autumn Budget 2025 confirmed some of the biggest changes to early-stage investment reliefs in over a decade. These changes affect how startups raise capital, how angels allocate their portfolios, and which companies will qualify for support from April 2026.

At a glance: the 2026 changes to EIS, SEIS and VCT

Enterprise Investment Scheme (EIS from April 2026)

Seed Enterprise Investment Scheme (SEIS)

No changes.

SEIS remains the most generous early-stage scheme and continues to support very young companies raising their first capital. It still supports young startups raising their first £250k and offers investors 50% income tax relief.

Venture Capital Trusts (VCT from April 2026)

Why this matters

These changes significantly shift the balance between direct angel investing, early-stage venture funds, and VCTs.

• For founders, your pool of eligible investors becomes wider.
• For angels, your tax-efficient allocation strategy may change entirely.

This article breaks down what to do next depending on whether you’re raising or investing.

What this means for founders

1. More companies will qualify for EIS

The increases in asset limit, age limit and employee count mean more established early-stage startups can now qualify for EIS.

In practice:

• If you’re raising your first or second round after a few years of product development, you’re now more likely to be eligible.
• Growth-stage teams (50–300 employees) that previously sat outside eligibility may now access angel capital.

Action:

Check your eligibility early and apply for Advance Assurance before speaking to investors (it remains a strong “signal of readiness”).

2. Angels can invest more per company

Doubling the annual EIS limit for individuals (and KIC uplift) means angels can now deploy larger cheques with the same tax advantages.

What founders should expect:

• Potential for fewer investors on the cap table per round (if one or two angels increase their allocation).
• Angels with high conviction may now participate in both early and follow-on rounds.

3. SEIS stays unchanged and still critical

The government left SEIS as-is.
That means founders raising their first £250k still benefit from:

• 50% income tax relief for investors
• Lower risk for new angels
• A cleaner path to your first round

If you’re pre-product or pre-revenue, SEIS remains the best route.

4. VCT attractiveness slightly decreases

With income tax relief reduced from 30% to 20%, VCTs become proportionally less attractive relative to direct EIS angel investing.

Impacts for founders:

• Early-stage companies may see slightly more interest from angels relative to VCT funds.
• VCTs may become more selective, focusing on later-stage and growth-ready opportunities.

5. Fundraising strategy will need minor adjustments

A few implications to consider:

• Bigger investors earlier: High-conviction angels may take more of your round.
• More follow-on appetite: Angels might support you for longer.
• Eligibility checks must be done earlier. VCT/EIS age rules now diverge a bit.

If you’re planning a 2026 raise, factor these into your timeline.

What this means for angel investors

1. Direct angel investing becomes more attractive

Doubling the EIS individual annual limit makes direct investments more tax-efficient for angels who prefer hands-on, early involvement.

You can now allocate more capital into fewer, high-conviction opportunities — or spread more evenly across a wider group.

2. VCTs become relatively less tax-efficient

The shift from 30% to 20% income tax relief is modest but meaningful for high-volume VCT investors.

This may push some investors back toward direct EIS investing or syndicate participation, where reliefs remain unchanged.

3. More companies will qualify under EIS rules

The expansion to older, larger and more developed businesses widens your investable universe.

This could be attractive if you prefer:

• More revenue-generating companies
• Later product-market fit
• More mature teams

In short: EIS investing becomes more flexible and diversified.

Timelines you need to know

All changes take effect 6 April 2026, at the start of the 2026–27 tax year.

Founders raising in 2025–26:
You’re still under current rules but investors may already be adjusting their strategies.

Founders planning 2026 raises:
Check eligibility early and update your fundraising materials.

Practical next steps for founders

1. Check eligibility for SEIS/EIS using the updated thresholds.
2. Apply for Advance Assurance well before outreach.
3. Update your investor materials to reflect eligibility under 2026 rules.
4. Prioritise investors who typically back your stage and sector.
5. Keep your cap table simple. Larger angel cheques may help here.

Practical next steps for angels

1. Review your 2026–27 tax planning early.
2. Consider whether higher EIS limits shift your allocation between direct investments and VCTs.
3. Reassess sectors where the higher asset and age caps will bring new opportunities.
4. Plan follow-on support earlier. Founders may expect it.

Final thoughts

For founders:

• More angels can invest more into your company.
• More established early-stage teams now qualify for EIS.
• SEIS stays strong for pre-seed.
• Expect slightly less emphasis on VCTs at the earliest stages.

For angels:

• EIS becomes a more flexible and attractive tool.
• VCTs remain useful but with reduced tax relief.
• The investable landscape gets broader and more mature.