Policy paper

Changes to venture capital schemes

Published 28 October 2026

Who is likely to be affected 

Companies and individual investors using the Seed Enterprise Investment Scheme (SEIS), Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs), fund managers and other promoters and advisers associated with the schemes. 

General description of the measure 

This measure makes changes to the SEIS, EIS and VCT rules. The changes will ensure that exceeding an EIS investment limit does not automatically result in all tax relief being lost, allowing relief to remain available on the part of the investment that falls within the scheme’s limits.

They will also allow:

• SEIS and EIS or VCT investment to take place on the same day
• prevent late payment by one or more investor’s from affecting the tax relief available to other investors
• align the SEIS rules on interest charged when relief is withdrawn or reduced with the equivalent EIS rules
• amend the VCT rules to ensure any withdrawal of Income Tax relief is calculated using the rate that applied when the shares were issued 

Policy objective 

The government is committed to creating the conditions for businesses to start, grow and scale in the UK. SEIS, EIS and VCTs are an important part of the UK’s growth finance ecosystem and help innovative and growing businesses access risk capital that may otherwise be difficult to obtain. 

This measure will make the schemes simpler, more consistent and easier to operate. It will provide greater certainty for founders and investors, reduce disproportionate outcomes arising from minor technical issues and ensure the schemes operate as intended.

Background to the measure 

At Budget 2025, the government announced increases to EIS and VCT company investment limits and launched a Call for Evidence on Tax Support for Entrepreneurs. The Call for Evidence closed in February 2026 and received 247 written responses. The government published its response to the Call for Evidence at Budget 2026.

Detailed proposal 

Operative date 

The changes relating to EIS investment limit apportionment, same-day SEIS and EIS or VCT fundraising, and the fully-paid shares requirement will have effect for shares issued, or VCT investments made, on or after 6 April 2027. 

The changes to the SEIS interest rules will have effect for SEIS shares issued on or after 6 April 2027. Existing rules will continue to apply to shares issued before that date. 

The amendment to the VCT relief withdrawal rules will have effect for disposals of shares issued on or after 6 April 2026. 

Current law

The EIS provisions are contained in Part 5 of the Income Tax Act 2007, the SEIS provisions are contained in Part 5A of that Act and the VCT provisions are contained in Part 6. Interest on underpaid tax is provided for by section 86 of the Taxes Management Act 1970.

Proposed revisions 

Legislation will be introduced in Finance Bill 2026-27 to amend Parts 5, 5A and 6 of the Income Tax Act 2007. 

Sections 173A and 173AA of Part 5 will be amended to introduce an apportionment mechanism where a company exceeds the annual or lifetime EIS investment limits. Relief will remain available for the proportion of the share issue that falls within the relevant limit. 

Section 257DK of Part 5A will be amended to allow SEIS shares and EIS shares, or SEIS shares and a VCT investment, to be issued or made on the same day without affecting eligibility for relief. 

Section 173 and section 257CA will be amended to  give HMRC a discretionary power to treat the shares as fully paid up where the subscription monies are received after the share issue due to exceptional and unavoidable circumstances outside the control of the company and investor.  

Section 205 and section 257ED will be amended to ensure that a failure by one or more investors to meet the fully paid up requirement does not, of itself, prevent relief being available in respect of qualifying shares subscribed for by other investors in the same issue.   

Section 257GD will be amended to align the date from which interest is charged on assessments withdrawing or reducing SEIS relief with the equivalent EIS provisions in section 239. 

Section 266 of Part 6 will be amended to ensure that, where VCT Income Tax relief is withdrawn, the amount withdrawn is calculated by reference to the rate of relief that applied at the time the shares were issued.

Summary of impacts 

Exchequer impact (£ million) 

2026 to 2027	2027 to 2028	2028 to 2029	2029 to 2030	2030 to 2031	2031 to 2032
—	—	negligible	negligible	negligible	negligible

This measure is expected to have a negligible impact on the Exchequer. 

Economic impact 

This measure is not expected to have any significant macroeconomic impacts. 

Impact on individuals, households and families 

This measure is expected to impact fewer than 100 individuals investing through SEIS, EIS and VCTs per year, by simplifying the operation of the schemes and reducing the risk that relief is lost due to minor technical or administrative issues. 

This measure is expected overall to impact individuals’ experience of dealing with HMRC by simplifying their customer journey and reducing disproportionate outcomes arising from minor technical issues. The measure is not expected to have any impact on family formation, stability or breakdown. 

Equalities impact 

This measure may apply to individuals regardless of their protected characteristics. HMRC does not hold data that it can use to assess whether there are any disproportionate impacts to protected groups. 

Administrative impact on business including civil society organisations 

This measure is expected to have a negligible impact on fewer than 100 businesses who use the venture capital schemes to access growth funding per year. The measure is expected to support companies seeking to raise investment under the schemes by reducing unnecessary complexity and providing more proportionate outcomes where minor technical issues arise. 

One-off costs will include familiarisation with the changes. There are expected to be no ongoing costs. 

This measure is expected overall to impact businesses’ experience of dealing with HMRC as the changes are expected to simplify the operation of the schemes, reduce administration in a small number of cases and provide greater certainty for companies and investors using SEIS, EIS and VCTs.

The measure is expected to have no impact on civil society organisations. 

Operational impact (HMRC or other) 

HMRC will need to make some changes to IT systems to implement these changes. The costs are estimated at £400,000. 

Other impacts 

Other impacts have been considered and none have been identified. 

Monitoring and evaluation 

The measure will be monitored through information collected from statutory compliance statements submitted by companies seeking investment under SEIS and EIS, VCT returns and other information collected through HMRC’s existing compliance and operational processes. 

Further advice 

If you have any questions about this change, contact venturecapitalschemes.policy@hmrc.gov.uk.