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In the Autumn Budget delivered by Rachel Reeves on 25 November, a number of significant changes were made to taxes, tax thresholds, and tax-efficient saving and investing schemes that will affect the tax you pay, the way you save and how you might choose to invest in future.
Read on for the details of each change, what it means for you, and how schemes like EIS and SEIS – which offer investors significant tax reliefs – can help. Please note, that we are not tax advisers, and any decisions around making investments for tax purposes should be discussed with an adviser familiar with your personal circumstances. Tax reliefs are subject to status and change.
Increased support for UK scale-ups and listings
What’s happening?
The Chancellor promised that the Enterprise Investment Scheme (EIS) and Venture Capital Trusts would be ‘re-engineered’, widening eligibility so that scale-ups can attract the talent and capital they need. In addition, she announced a three-year stamp duty holiday on newly listed company shares, to encourage and support new businesses moving to IPO in London.
What does that mean for investors?
For investors making tax-efficient investments in private companies through schemes like EIS and VCT, this is a positive step that will mean those companies receive a greater degree of support as they develop beyond their earliest stages up to and including exits via IPO.
The funding environment for startups has been considered difficult for several years now, with overall amounts invested falling significantly, and a common source of concern for investors is the difficulty startups face making the jump from a successful early-stage venture to a successful scale-up, and to exiting (being acquired, or listing on a public exchange).
Reduction in cash ISA allowance from £20k to £12k
What’s happening?
From 6 April 2027, the annual limit for investments into cash ISAs will fall to £12,000 for under 65s. This is to encourage more investment into stocks & shares ISAs, where the limit will remain at £20,000.
What does that mean for investors?
You’ll be able to save less in cash ISAs each year, meaning the amount of tax free interest will be lower.
How can S/EIS help?
While saving in a cash ISA and investing in high-risk venture capital schemes like EIS and SEIS are very different, this change is meant to encourage investors to put their money in stocks and shares ISAs instead, to support UK businesses and the economy. A stocks and shares ISA is more comparable to EIS and SEIS, as your money is at risk, and the value of your investment can fall, although stocks and shares ISAs are typically lower risk investments than S/EIS investments.
So, if you’re looking to make a decision between putting £20k in a stocks and shares ISA, or choosing to invest in early stage startups through EIS and SEIS, consider that EIS and SEIS offer considerable tax reliefs on income tax, capital gains tax, tax-free growth, loss relief, and inheritance tax exemption, in exchange for a higher degree of risk. If you are motivated by supporting the economy, EIS and SEIS will certainly offer you more significant potential for sizeable returns, because these investments deploy funds into early-stage businesses with a high potential for growth.
Increase tax rates on dividends, property and savings income
What’s happening?
Tax rates on these sources of income will increase by 2%
How does S/EIS help?
EIS and SEIS offer income tax relief of 30% and 50% respectively, so investing in these schemes allows investors to mitigate increases to income tax.
Income tax thresholds frozen until 2030
The Chancellor will be freezing income tax thresholds to 2030. This means that as wages increase with inflation, more people will fall into higher tax brackets - a process known as fiscal drag.
What does that mean for investors?
More people will find themselves paying a higher rate of tax.
How does S/EIS help?
For people with sufficient funds to make high-risk investments in EIS and SEIS – which offer income tax relief of 30%, and 50%, respectively – the increase in the amount of income tax they need to pay can be somewhat mitigated through tax relief.
Fall in VCT income tax relief to 20%
What’s happening?
The UK 2025 Budget has reduced the upfront income tax relief on Venture Capital Trusts (VCTs) from 30% to 20%, effective from April 2026.
What does that mean for investors?
Investors looking to make a tax efficient investment into startups will now find other products, such as EIS and SEIS, offer better rates of income tax relief – 30%, and 50%, respectively.
Increased council tax or "Mansion tax" on properties worth over £2m
What’s happening?
A mansion tax on properties worth over £2m, in the form of a council tax surcharge. Properties worth over £2m will receive an annual £2,500 council tax surcharge, while for those with properties worth over £5 million this will increase to £7,500 annually.
How does S/EIS help?
EIS and SEIS offer capital gains tax deferral, and reinvestment relief respectively, so homeowners who find themselves facing the new mansion tax can look to offset this by reducing or deferring their capital gains tax bill on the sale of their property.
EIS capital gains deferral relief allows you to invest an amount equal to the gain in EIS-eligible companies, and treat that gain as if it has not arisen for as long as you hold your shares.
SEIS reinvestment relief grants a 50% reduction in a capital gain if you invest an amount equal to the gain in SEIS-eligible companies in the year that the gain arises.
Note, capital gains tax is only due if the property being sold is not your main home.
National Insurance on salary sacrifice pension contributions
What’s changing?
Salary-sacrificed pension contributions above £2,000 would be treated as ordinary employee pension contributions in the tax system and therefore be subject to both employer and employee national insurance contributions.
What does this mean for investors?
This change continues a trend around pensions, and ISAs, that make them less attractive. While EIS and SEIS are high-risk products, and shouldn’t be considered alternatives to a pension, the diminishing appeal and tax efficiency of pensions and ISAs might encourage more investors to look at EIS and SEIS funds alongside traditional approaches to tax efficient saving.
EIS and SEIS offer investors significant tax reliefs against income tax, capital gains tax, inheritance tax exemption, tax-free growth and loss relief.
Tax efficient investing with EIS and SEIS
If you’re looking to start building your portfolio of high-growth startups and claim tax relief, take a look at the investment opportunities we currently have available:
Carbon13 SEIS Fund VIII
Climatetech-focused Carbon13 SEIS Fund is managed in partnership with expert climatetech venture builder, Carbon13. This fund invests in cutting edge climatetech innovations built by a hand picked cohort of founders that have graduated from Carbon13’s venture builder programme.
NOTE - this fund closes to investment on 12 Decembe, don’t miss out!
The Access EIS Fund.
This is the UK’s most diversified fund. It co-invests with leading UK angel investors to build you a large portfolio of high-potential startups across all sectors, aiming to maximise your return potential.
Please note: our office hours are weekdays, 9.30am - 5.30pm.
