Every budget we hope that EIS and SEIS come through untouched and that the talk of a capital gains tax rise stays as talk. This year we got both, along with a few changes I didn't expect.
Ahead of the Budget I looked at what taxing gains like income would mean. That didn't happen, and the main CGT rates stay at 18% and 24%. Instead, John Healey used his first Budget as Chancellor to cut CGT for founders through a new 10% Founders' Relief, while halving the lifetime limit on Business Asset Disposal Relief (BADR). Alongside the Budget, the Treasury published its response to last year's Call for Evidence on tax support for entrepreneurs, which is where most of the EIS and SEIS detail sits.
There are four things here that matter for startup investors: what changes for EIS and SEIS, the CGT changes, a further rise in tax on savings income, and what the Budget says about the wider startup funding market. (I'm writing this on Budget afternoon, while the detailed documents are still being published, so some of the detail may shift.)
The most important thing about EIS and SEIS in this Budget is what didn't change. EIS income tax relief stays at up to 30% on up to £1 million a year (£2 million where anything above £1 million goes into knowledge-intensive companies). SEIS stays at up to 50% on up to £200,000. The CGT exemption on qualifying gains, loss relief and CGT deferral are all untouched (VCT relief, cut from 30% to 20% in April, was not restored).
After last year's increases to the EIS company limits, which took effect in April 2026, I think this stability is a good sign. It was also a recurring message in the 247 written responses to the Call for Evidence.
What the government has done is fix some of the ways these types of investments can lose their relief on a technicality. Finance Bill 2026-27 will:
ensure that exceeding an EIS investment limit no longer automatically means all relief is lost
allow SEIS and EIS or VCT investment to take place on the same day
stop late payment by one or more investors affecting the relief available to the others
align the SEIS rules on interest charged when relief is withdrawn with the EIS rules
calculate any withdrawal of VCT relief at the rate that applied when the shares were issued
The VCT change applies to disposals of shares issued from 6 April 2026. The rest apply to share issues from 6 April 2027.
In short what this means is that a small mistake by one party is less likely to cost every investor their relief. The late-payment fix matters most for anyone investing through a syndicate or fund, where one investor's delay can put everyone else's relief at risk (a rare problem, but an unpleasant one when it happens). The same-day change is a quality of life change, one our companies often had to navigate through when investing alongside different vehicles.
The government considered capping fees and decided against it, arguing that caps could reduce competition or discourage investment in higher-risk businesses. Instead it will work with industry and the FCA to make fees and investment terms more transparent and comparable. The EISA already does good work here to make fees more transparent for EIS funds. HMRC will also strengthen its guidance and compliance work on arrangements that divert an undue share of EIS and SEIS money through fundraising fees, intermediary charges or similar structures.
I agree with both sides here. Fees reflect different investment models and levels of support. Most funds provide support and some run intense programmes for startups and cannot perform these for free (nor are they covered by investor fees), but it's also important that these company fees are made clear to investors and not taken unduly.
Three smaller points. HMRC will work with industry to improve the Advance Assurance service, which respondents said can hold up fundraising. Calls to extend company age limits and the six-month longstop on advance subscription agreements were turned down, with better guidance promised instead. And the government flagged that the rules require a UK permanent establishment but not that the money raised is spent in the UK. It will monitor this and may act. I'd watch that one, because a tighter UK-activity test would change which companies qualify.
The biggest change is Founders' Relief. From 6 April 2027, qualifying founders and early investors in high-growth, innovative companies will pay 10% CGT on up to £10 million of lifetime gains. The policy costings set out the main conditions. The individual must hold at least 25% of the company at the start of trading, and the company must meet minimum turnover and employment thresholds plus two of three tests on turnover growth, headcount growth and R&D. The Treasury costs the relief at £260 million in 2027-28 and £300 million by 2031-32.
The technical consultation, published this afternoon and open until 30 November, fills in more detail. The 25% must have been held when the company started trading, the shares held for at least five years, and the individual UK resident for at least five years. The company needs at least £10 million of turnover and 15 qualifying full-time employees in the accounting period before the sale, and BADR or Investors' Relief claims count against the same £10 million limit.
Will this help EIS investors directly? For most, no. A 25% stake at the start of trading is a founder's holding, not a typical angel's or S/EIS fund investor. And gains on EIS shares held for at least three years are already free of CGT where income tax relief was given. Founders' Relief gives founders something EIS already gives investors.
The indirect effect matters more. A founder who would otherwise pay 24% on most of a large gain (18% on the slice covered by BADR) will now pay 10%. That gives founders more reason to build and stay in the UK, and more capital to reinvest once they exit.
BADR goes the other way. Its lifetime limit halves from £1 million to £500,000 for disposals from 6 April 2027, and the Treasury says three-quarters of claimants will still get relief on their whole gain. Gains above the new limit will be taxed at 24% for higher rate taxpayers (or 18% within any unused basic rate band). Disposals made before 6 April 2027 keep the £1 million limit, so for anyone planning a sale the timing now matters more (although sale decisions should rarely be driven by tax alone).
It's also worth noting what the government chose not to do. Many respondents asked for a new CGT reinvestment relief. The Treasury declined, pointing instead to the existing EIS deferral relief, and committed to raise awareness of it. Under deferral relief, a gain on any asset can be deferred by investing in EIS-qualifying shares from 12 months before to three years after the gain arises. The Treasury's own costing of the BADR change assumes some sellers will move into investments that receive CGT relief.
Put simply, if you are reinvesting a gain into startups, the route the government wants you to use is the one that already exists.
The government has chosen EIS as its reinvestment route rather than building a new one.
Budget 2025 had already added two percentage points to the tax on savings income from April 2027. This Budget adds two more from the same date, so savings income will be taxed at 24%, 44% and 49% across the UK. Property income rates rise by the same amount, and the cash ISA limit stays at £20,000.
This isn't an EIS measure, but it matters for anyone comparing where to put their money. From April 2027, an additional rate taxpayer earning interest outside an ISA will keep 51p of each pound. I don't think anyone should move savings into startups because of that (EIS is high-risk, illiquid and should only ever be a small part of a portfolio). But for investors already weighing a venture allocation, the gap between taxed returns and tax-advantaged ones has widened again. The Treasury's own costing expects some savers to shift towards tax-advantaged products such as ISAs.
For the wider startup market, most of the new money comes through the British Business Bank. Its financial capacity rises by £5 billion to £30.6 billion, including £1.4 billion of new commitments to equity funds backing high-growth businesses and £450 million for a new venture debt product. Separately, the Mansion House Accord, under which 17 of the largest workplace pension providers have committed to put at least 10% of their main default funds into private markets by 2030 (at least half of it in the UK), is expected to unlock around £25 billion.
That money is welcome, but it is aimed mostly at scale-ups. The government's own prospectus notes that 74% of UK venture capital investment by value came from abroad in 2025, and the gap it wants to close is in scale-up capital.
Meanwhile the early-stage market hasn't been growing. EIS investment was flat at £1.58bn in 2024-25, still below its 2021-22 peak of £2.3bn, and the number of investors claiming relief fell 7%. The Call for Evidence responses were clear that EIS and SEIS capital comes mainly from angels, successful entrepreneurs and specialist early-stage investors, and none of today's announcements change who funds that stage.
Even at the later stages, UK pension money has been slow to show up. When we looked at who funded Wayve, UK pension funds played a very small part in its £851.7m Series D (at least directly, which is all the filings show), while Ontario Teachers' Pension Plan bought £36.7m of shares. The Mansion House pledges deal with how much pension funds allocate, but most UK schemes are only starting to build the teams needed to invest in private companies.
Founders also get help with hiring. The Company Share Option Plan is renamed EMI2 and its individual option limit doubles from £60,000 to £120,000 from April 2027, so an employee can hold up to £370,000 of options across EMI and EMI2. The government will also legislate so that non-compete clauses no longer stop startups from hiring.
The Chancellor also made a point of backing women founders. The Budget confirms two new voluntary standards from the Women in Tech Taskforce, Tech Forward and Inclusive Investment, aimed at the barriers women face in raising capital and working in tech. Alongside them is a new scale-up programme for women founders. It will test how best to help them raise investment, possibly through peer learning, investor networks and practical support on finance and governance. The British Business Bank also has a pipeline of more than £100 million of commitments to women-led funds.
These are welcome, although voluntary standards and a test programme are a modest response to the size of the problem. (We run a fund for female-founded tech with Angel Academe, so this is an area we follow closely.) When we analysed Companies House filings, all-female founding teams won around 6–7% of UK equity deals but only 2.5–3.7% of the money raised, and we found no all-female-founded raise above £50m. The gap is less about getting funded at all and more about getting funded well, which is why I think the scale-up focus is the right one. We will have to see whether the programme reaches enough founders to move those numbers.
Three things are worth watching. First, the Founders' Relief technical consultation, which closes on 30 November and will settle the final conditions. Second, the Finance Bill 2026-27 drafting of the EIS and SEIS fixes, which will show exactly how each one works. Third, whether the government acts on the question of money raised in the UK being spent elsewhere.
Overall I'd describe this as a stable Budget for EIS and SEIS investors and a generous one for founders. Given how firmly the government has now backed EIS as its reinvestment route, I don't expect the reliefs to come under pressure again soon (although tax policy can, and does, change).
If you'd like to talk through what this means for your own plans, reach out to the team.
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Tax relief depends on an individual's circumstances and may change in the future. In addition, the availability of tax relief depends on the company invested in maintaining its qualifying status.
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