Policy paper

Venture Capital Trusts, Enterprise Investment Scheme investment limit increase and restructure

Published 26 November 2025

Who is likely to be affected

This measure will affect companies and individual investors using the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs), fund managers and other promoters and advisers associated with the EIS and VCTs.

General description of the measure

This measure increases the existing annual, lifetime and gross assets limits for those companies that are receiving investment under the EIS or VCT scheme. It also reduces VCT Income Tax relief rate for individuals investing in VCTs.

Policy objective

Extending the EIS and VCT limits increases the real-terms generosity of the schemes. This continues to provide support to new and early-stage companies, as well as those scaling up. 

The reduction in the Income Tax relief rate for the VCT scheme is designed to better balance the amount of upfront tax relief compared to EIS, which does not offer dividend relief, and incentivising funds to seek out higher returns, to ensure they are targeting the highest growth companies.

Background to the measure

At Autumn Budget 2024, the government committed to creating a positive environment for entrepreneurship and working with leading entrepreneurs and venture capital firms to understand how policy supports that, including the role of the existing tax schemes.

Detailed proposal

Operative date

The measure will take effect from 6 April 2026.

Current law

The current EIS legislation is contained in Part 5 of the Income Tax Act (ITA) 2007.

The current VCT legislation is contained in Part 6 ITA 2007.

Proposed revisions

Legislation will be introduced in Finance Bill 2025-26 to amend Parts 5 and 6 of ITA 2007 to the following: 

• Sections 186 and 297 ITA2007 will be amended to increase the gross assets requirement that a company must not exceed for the EIS and VCT to £30 million (from £15 million) immediately before the issue of the shares or securities, and £35 million (from £16 million) immediately after the issue
• Sections 173A and 292A ITA 2007 will be amended to increase the annual investment limit that companies can raise to £10 million (from £5 million) and for knowledge-intensive companies to £20 million (from £10 million)
• Sections 173AA, 173AB, 292AA and 292AB ITA 2007 will be amended to increases the company’s lifetime investment limit to £24 million (from £12 million) and for knowledge-intensive companies to £40 million (from £20 million)
• Section 263 ITA 2007 will be amended to reduce the Income Tax relief that can be claimed by an individual investing in VCT to 20% from the current rate of 30%

The increases to the annual, lifetime and gross asset limits apply only to qualifying companies that are not registered in Northern Ireland trading in goods or the generation, transmission, distribution, supply, wholesale trade or cross-border exchange of electricity. These companies will remain eligible for the current scheme limits.

Summary of impacts

Exchequer impact (£ million)

2025 to 2026	2026 to 2027	2027 to 2028	2028 to 2029	2029 to 2030	2030 to 2031
Nil	Nil	+65	+50	+45	+45

These figures include the fiscal impact of 2 measures:

• Venture Capital Schemes: Increase the Venture Capital Trust (VCT) scheme and the Enterprise Investment Scheme (EIS) annual and lifetime investment limits and the gross assets test from 6 April 2026
• Venture Capital Schemes: Reduce the VCT scheme Income Tax relief from 6 April 2026

These 2 measures have been costed separately and the figures are set out in Table 4.1 of Budget 2025 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Budget 2025.

Macroeconomic impact

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

Impact on individuals, households and families

This measure will impact around 24,000 individuals, who will receive less Income Tax relief on their VCT investments. There is expected to be no impact on individuals’ experience of dealing with HMRC, as this measure does not change or introduce any tax obligations or processes. The measure is not expected to impact on households, family formation, stability or breakdown.

Equalities impacts

An individual may be affected by this measure regardless of their protected characteristics. If a protected group is overrepresented in this population, then it will be disproportionately impacted.

The population that invests in VCTs is estimated to have an overrepresentation of males (76%) compared to their prevalence in the UK adult population (50%). In addition, it is estimated there is an overrepresentation of those aged 45 to 64 (57%) compared to the UK adult population (31%).

HMRC does not currently hold data on the other protected characteristics of individuals impacted by this measure and so cannot make an assessment of the impacts on those with shared protected characteristics. 

Administrative impact on business including civil society organisations

This measure will benefit businesses using the scheme, allowing them to access further investment through the schemes. It is expected to have a negligible administrative impact on businesses who raise capital via the EIS or VCT, fund managers and other promoters and advisers using or associated with the EIS and VCTs, by increasing the existing annual, lifetime and gross asset limits and so widening access to and usage of the scheme. It will particularly impact the estimated several hundred businesses that are close to these limits.

One-off costs are expected to include familiarisation with the changes. There are not expected to be any continuing costs. Customer experience is expected to remain broadly the same as this measure does not change how businesses interact with HMRC. There are not expected to be any impacts on civil society organisations.

Operational impact (£ million) (HMRC or other)

HMRC will need to make some changes to IT systems to implement these changes. The costs are estimated at £1.7 million. There are no costs that are expected in updating the guidance.

Other impacts

Other impacts have been considered and none have been identified.

Monitoring and evaluation

The measure will be monitored and assessed alongside other measures in the government’s package for entrepreneurship.

Further advice

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