EIS in 2026: Why Tax Policy Developments Are Putting the Scheme Back in Focus
Tax policy is rarely static, but recent changes to pensions, Venture Capital Trusts (VCTs) and ongoing discussions around Capital Gains Tax (CGT) and wealth transfer planning have led many investors to revisit the Enterprise Investment Scheme (EIS).
EIS has been part of the UK's investment landscape for more than 30 years and was designed to encourage investment into smaller, growing UK businesses. While political and tax debates continue, many of the scheme's core reliefs remain established in legislation and are currently available until at least April 2035. [gov.uk], [wealth365.co.uk]
What EIS offers investors in 2026
For qualifying investments, EIS currently provides:
30% income tax relief on eligible investments, subject to HMRC rules.
Capital Gains Tax deferral relief on eligible gains.
Exemption from Capital Gains Tax on gains from qualifying EIS shares where conditions are met.
Loss relief, subject to individual circumstances and HMRC rules.
Potential Business Relief after two years, which may reduce exposure to Inheritance Tax where qualifying conditions continue to be met.
Reliefs currently legislated through to April 2035. [gov.uk], [gov.uk]
As with all early-stage investing, EIS investments carry significant risk and investors may lose some or all of their capital.
Looking to understand how EIS works in practice?
Download our free Guide to EIS Investing, which explains the current reliefs, qualifying criteria and key risks associated with investing in EIS-eligible companies.
The debate around CGT and inherited assets
One area attracting attention is the long-established CGT uplift on death.
Under current rules, there is generally no CGT charge when someone dies and inherited assets are rebased to their market value at the date of death. HMRC guidance confirms this remains the current position. [gov.uk]
However, the future of this treatment has become a topic of public discussion. Reporting during 2026 suggested that figures associated with the wider Burnham camp have considered whether the CGT uplift on death should be reviewed as part of broader tax reform. No formal government proposal has been published and investors should treat discussion of any changes as speculation rather than policy. [gbnews.com]
For investors reviewing long-term planning arrangements, the discussion serves as a reminder that established tax rules can change, particularly during periods of wider fiscal review.
Pensions are becoming part of the IHT conversation
A more definite change is already scheduled.
From 6 April 2027, most unused pension funds and pension death benefits will be brought within the scope of Inheritance Tax. The change has been legislated and published by HMRC. The Government's stated objective is to refocus pensions on retirement provision rather than intergenerational wealth transfer. [gov.uk], [gov.uk]
For investors who have historically viewed pensions as an important estate planning tool, this represents a notable policy change. As a result, greater attention is being paid to alternative assets that may qualify for Business Relief, including certain EIS investments. [adviser.ro...london.com], [gov.uk]
EIS and VCTs have moved further apart
Another relevant development took effect on 6 April 2026.
The Government reduced Venture Capital Trust (VCT) income tax relief from 30% to 20% while retaining EIS income tax relief at 30%. At the same time, qualifying company investment and asset thresholds under EIS were expanded, allowing larger growth companies to remain eligible for the scheme. [gov.uk], [gov.uk]
VCTs and EIS remain different structures designed for different investor needs. However, the relative tax treatment of the two schemes has changed since April 2026. [gov.uk], [accaglobal.com]
Why investors are watching Burnham's policy agenda
Alongside changes that have already been legislated, investors are following wider discussions around the future direction of tax policy under Andy Burnham's government.
Since becoming Prime Minister, Burnham has consistently spoken about regional growth, reindustrialisation, devolution and increasing investment outside London and the South East. His objective of delivering "good growth in every postcode" has become a recurring theme in policy discussions. [theguardian.com], [theguardian.com], [cfr.org]
Separately, media reporting has suggested that figures within the wider Burnham camp have discussed areas such as inheritance tax, wealth taxation and the future of the CGT uplift on death. At the time of writing, no formal proposals have been announced by government. [gbnews.com]
The relevance to EIS is straightforward. The scheme was designed to encourage investment into smaller UK businesses. Many EIS-qualifying companies operate in sectors and regions that policymakers regularly identify as important drivers of economic growth, including technology, manufacturing, healthcare, energy, food and agriculture. [gov.uk], [gov.uk]
EIS in the current tax environment
The Enterprise Investment Scheme remains one of the UK's established mechanisms for supporting investment into growing businesses.
While there is ongoing debate around the future direction of parts of the tax system, the core EIS reliefs remain clearly defined in legislation and are currently available through to 2035. [gov.uk], [wealth365.co.uk]
That does not change the underlying investment risk. EIS investments remain higher-risk, illiquid investments and may not be suitable for all investors. Individual circumstances, investment objectives and professional advice should always be considered before making investment decisions.
Where Innovate Capital Partners (ICP) fits in
Innovate Capital Partners (ICP) is a corporate advisory and introduction business that helps investors discover and connect with growth companies that may qualify for EIS investment.
ICP does not provide investment advice and does not arrange investments. Instead, it helps founders and investors identify potential opportunities and facilitates introductions, with any regulated activities undertaken by appropriately authorised firms where required.
The objective is to support connections between investors seeking exposure to innovative UK businesses and founders looking to access growth capital, while operating within the UK's regulatory framework.
Sources
HMRC – Current CGT treatment on death: HS282 guidance [gov.uk]
HMRC – Enterprise Investment Scheme and Venture Capital Trust changes: Policy paper [gov.uk]
HMRC – Detailed April 2026 EIS and VCT reforms: Finance measure [gov.uk]
HMRC – Inheritance Tax on pensions from April 2027: Technical note [gov.uk]
HMRC – Unused pension funds and death benefits: Policy paper [gov.uk]
The Guardian – Burnham's devolution and growth agenda: Good growth in every postcode [theguardian.com]
The Guardian – Burnham's economic priorities: Burnham's economic to-do list [theguardian.com]
Council on Foreign Relations – Analysis of Burnham's economic agenda: What to Expect From the UK's New Prime Minister [cfr.org]
GB News – Reporting on discussion around CGT uplift on death: Double death tax discussion [gbnews.com]
Learn more
For readers interested in learning more about EIS investing and the UK growth company market:
Download the ICP Guide to EIS Investing
A practical guide covering EIS tax reliefs, qualifying criteria, risks and frequently asked questions.
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