New Capital Link’s Guide To EIS Tax Relief In 2026

This article is provided for general information only. It does not constitute a financial promotion, investment advice, or an invitation or inducement to engage in investment activity under the Financial Services and Markets Act 2000 (FSMA). New Capital Link Ltd is not authorised or regulated by the Financial Conduct Authority.

This guide is published by New Capital Link, a UK-based introducer of alternative investment opportunities, as part of its general investor education material. The Enterprise Investment Scheme offers UK taxpayers income tax relief of up to 30 percent on qualifying investments, alongside four further reliefs covering capital gains, losses, deferral, and inheritance tax. It has operated since 1994 and has been extended by the government to at least 2035, with a set of changes taking effect from the 2026/27 tax year that affect both companies raising money and individuals investing in them.

According to HMRC’s most recent figures, released in May 2026, 3,735 companies raised a combined £1,575 million under EIS in the 2024/25 tax year, a level of funding that has held broadly steady since the previous year. Of that total, companies raising money under the scheme for the first time accounted for £333 million across 1,145 companies, showing that new businesses continue to reach the scheme rather than it being dominated by repeat fundraises.

That single fact, the extension to 2035, tells you something most articles skip over. EIS is not a short-term incentive that might disappear at the next Budget. It is a long-standing piece of UK tax policy, built around a specific trade-off: investors take on the risk of backing small, early-stage companies, and in exchange the tax system absorbs a meaningful share of that risk.

What The Enterprise Investment Scheme Is For

EIS exists because early-stage UK companies often cannot get funding through banks or public markets. Banks want security and track record, and small trading companies rarely have either in their first years. EIS solves this by giving private investors a set of tax reliefs substantial enough to justify backing a company that has no listing, no long financial history, and a real chance of failing.

This is worth stating plainly, because it explains every rule that follows. The reliefs are generous because the underlying investment is genuinely high risk. One does not exist without the other.

The sector data backs this up. HMRC’s 2024/25 figures show the Information and Communication sector alone accounted for £550 million of EIS investment, 35 percent of the total raised that year, which is exactly the kind of asset-light, high-growth, high-failure-rate business that struggles to get a bank loan but can offer genuine upside to an investor prepared to back it early. Geographically, companies registered in London and the South East accounted for £948 million, or 60 percent of all EIS investment in 2024/25, reflecting where most qualifying early-stage companies are based rather than any restriction on where investors themselves can live.

The Five Reliefs, And How They Fit Together

Most explanations of EIS list five reliefs as though they operate independently. In practice, they interact, and understanding the interaction matters more than memorising each one in isolation.

Income tax relief is the headline figure. An investor can claim 30 percent relief on the amount subscribed for qualifying shares, up to the annual investment limit, and can apply that relief to the tax year of investment or carry it back one year. On a ten thousand pound investment, that is a three thousand pound reduction in an income tax bill, assuming the shares are held for the required period and the company keeps its qualifying status throughout.

Tax-free growth follows on from that. Provided income tax relief has been claimed and not withdrawn, and the shares are held for at least three years, any gain on disposal is free of capital gains tax. This relief only has value if the income tax relief step happened correctly first, which is why the two are usually discussed together rather than as separate benefits.

Loss relief addresses the other side of the risk. If a qualifying company falls in value or fails, an investor can offset the loss, net of the income tax relief already received, against income or capital gains. This changes the actual downside of an EIS investment considerably compared with an equivalent investment that carries no relief at all.

Deferral relief lets an investor defer a capital gain realised elsewhere by reinvesting it into EIS qualifying shares. The gain does not disappear. It is pushed into the future, which gives an investor more control over when a tax liability falls due.

Inheritance tax relief applies once EIS shares have been held for at least two years and continue to be held at the time of death. This has become a more prominent part of EIS discussions as reforms to other inheritance tax reliefs, including those affecting AIM-listed shares, have narrowed what used to be a wider set of options for estate planning.

What Changed From April 2026

The company investment limits under EIS and the related Venture Capital Trust scheme increased from 6 April 2026, allowing a broader range of scaling businesses to qualify for funding under both schemes. Under the Finance Act 2026, knowledge-intensive companies can now raise up to £20 million in relevant investment in any 12-month period, with a lifetime limit of £40 million for most companies, up from the previous thresholds. Alongside this, wider changes to inheritance tax reliefs, particularly the treatment of Business Relief and AIM shares, have shifted how advisers think about EIS relative to other estate planning tools.

None of this changes the fundamental structure of EIS. What it does is widen the pool of companies that qualify, and it strengthens the relative position of EIS within inheritance tax planning at a moment when other options have become less generous. Anyone who looked at EIS a few years ago and moved on is looking at a slightly different scheme now.

Who The Scheme Applies To

EIS investments fall under UK financial promotion rules, and access is restricted to investors who meet specific criteria, including certified high net worth individuals, certified sophisticated investors, and those who self-certify as sophisticated under the relevant regulations. This restriction exists because the underlying investments are illiquid, high risk, and not covered by the Financial Services Compensation Scheme. It is not a formality. It reflects the genuine possibility of losing the full amount invested.

About New Capital Link

New Capital Link is a UK-based introducer that connects investors who meet the relevant eligibility criteria with providers of alternative investment opportunities, including EIS. New Capital Link Ltd is not authorised or regulated by the Financial Conduct Authority and does not provide investment advice. Its role is limited to introduction, and any decision to invest sits with the investor and the regulated or exempt party offering the underlying opportunity.

Separately from its introducer activity, the company operates the New Capital Link Foundation, which supports causes and communities outside the investment side of the business. Details of the foundation’s work are published on its own site, New Capital Link Foundation. The company also maintains a dedicated recruitment site, New Capital Link Careers, listing current roles across the business.

The Point Worth Remembering

EIS was built around a trade, not a guarantee. Investors accept real risk in early-stage companies, and the tax system meets them partway with reliefs that can materially change the outcome if the investment goes well and soften it if the investment does not. The 2026 changes have not altered that trade. They have widened who qualifies on the company side and sharpened the case for EIS within inheritance tax planning specifically. Anyone considering the scheme still needs to start from the same question: does this level of risk, tax relief included, actually fit the plan.