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Did the 2026 Budget change SEIS and EIS?
This Budget changed SEIS and EIS only at the margins. The Treasury promised to improve the venture capital schemes, but HMRC's overview of tax legislation shows this means fixing minor technical issues in the SEIS, EIS and VCT rules, mostly from 6 April 2027.
For investors, the essentials stand. EIS income tax relief remains 30% and SEIS 50%, subject to the usual conditions and a three-year minimum holding period. The higher EIS company limits introduced in April 2026 also remain. After several years of change, that stability is welcome in itself.
What is Founders' Relief, and who will it help?
Founders' Relief is a new Capital Gains Tax relief. It will apply a 10% rate to qualifying disposals of shares, up to £10 million of lifetime gains per person, for disposals on or after 6 April 2027 (HM Treasury consultation).
The detail matters for our readers: the relief is aimed not only at founders but also at significant early investors in high-growth, innovative UK companies. The proposed conditions, covering ownership, the company and its growth and innovation record, are open for consultation until 30 November 2026, with legislation to follow in Finance Bill 2026-27.
Two open questions will decide its value for EIS and SEIS. First, how "significant early investor" is defined, and whether typical EIS fund investors could ever qualify. Second, how it sits alongside the existing CGT exemption on EIS and SEIS shares held for three years. We will be following the consultation closely.
What is changing for Business Asset Disposal Relief?
At the same time, Business Asset Disposal Relief, the long-standing relief for business owners selling up, is being cut back. From 6 April 2027 its lifetime limit falls from £1 million to £500,000, while the 18% rate is unchanged (Budget 2026 documents).
The overall direction is clear: less support for business owners in general, more for founders and backers of the fastest-growing companies. That is closer to the space EIS and SEIS occupy.
What happened to Capital Gains Tax and Inheritance Tax?
Neither changed in ways that affect EIS and SEIS. The main Capital Gains Tax rates stay at 18% and 24%, so the value of EIS deferral relief and SEIS reinvestment relief is unchanged. Remember that deferral postpones tax rather than removing it: the deferred gain normally becomes taxable again when the EIS shares are sold.
On Inheritance Tax, there was no U-turn on the reforms that took effect in April. Business relief still gives 100% relief on the first £2.5 million of qualifying business and agricultural assets, and 50% above that. For many investors, the estate-planning benefit of EIS shares held for at least two years remains as important as the upfront income tax relief.
What does the Budget mean for early-stage companies raising money?
The biggest boost is in public capital. The National Wealth Fund and British Business Bank will receive an extra £20.4 billion between them, £15.4 billion of it for the National Wealth Fund (HM Treasury). The British Business Bank gains more equity capacity and a new venture-debt offer, with a focus on smaller firms' access to finance.
This matters for follow-on funding: the later rounds a company needs after its EIS and SEIS investors have backed it. More public co-investment can help. The government is also tripling the trading allowance to £3,000, simplifying access to R&D tax reliefs and expanding tax-advantaged employee share schemes, which help young companies hire and keep talent.
Sapphire's perspective
Last week, I published our market watch blog called Budget Watch 2026: Pre-Budget briefing for EIS and SEIS on what we thought was to change, and I was pleased to see that it was an accurate enough prediction!
EIS and SEIS work best when investors can plan years ahead, and on the information published so far this Budget has delivered that stability. Founders’ Relief is a welcome signal that the government wants entrepreneurs to build, stay and reinvest in the UK. Its success for early-stage investment will depend on whether the final design draws founders’ gains back into the next generation of companies, including through EIS and SEIS.
I am also pleased to see the British Business Bank double its commitments to women-led businesses and funds to £200 million, alongside a new scale-up programme for female founders. Sapphire has been a signatory of HM Treasury’s Women in Finance Charter since 2018, and we know that women remain under-represented both among founders raising venture capital and among the fund managers deploying it. That is why the inclusion of women-led funds, not just women-led companies, matters to us. As a firm that helps sector specialists launch their own funds, we believe more diverse investment teams will back a wider range of founders, and we look forward to supporting more women into fund management.
Tax relief does not remove the risk of investing in early-stage companies, but a predictable framework keeps patient capital flowing to British growth businesses.
Frequently asked questions
Are SEIS and EIS tax reliefs changing after the 2026 Budget? No. EIS income tax relief remains 30% and SEIS 50%. Only minor technical fixes were announced, mostly from 6 April 2027.
When does Founders' Relief start? It is planned to apply to qualifying disposals on or after 6 April 2027, once legislation is passed. The consultation on its conditions closes on 30 November 2026.
Did the Budget change the £2.5 million business relief cap? No. The cap, with 50% relief above it, remains as introduced in April 2026.
Important information
This article is for general information only and does not constitute tax, legal or investment advice. It reflects Budget announcements as at 28 October 2026, which remain subject to consultation and legislation and may change. EIS and SEIS investments are high risk and illiquid, and you could lose all the money you invest. Tax reliefs depend on individual circumstances, qualifying conditions and future changes in legislation. Sapphire Capital Partners LLP is authorised and regulated by the Financial Conduct Authority (FRN 565716).
