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Budget Watch 2026: Pre-Budget briefing for SEIS and EIS
On Wednesday 28 October, John Healey delivers his first Budget as Chancellor of the Exchequer.
With headline rates of income tax, VAT and National Insurance ruled out, and the Institute for Fiscal Studies warning that protecting public spending could require about £35 billion in tax rises or savings, attention has turned to taxes on capital and wealth.
These are the four developments we believe EIS fund managers, investors and advisers should watch more closely.
Sapphire's perspective is that EIS and SEIS work best when investors can plan years ahead. The reforms that took effect in April, including doubled EIS company limits, were a welcome vote of confidence; what the market needs now is stability, not another round of pre-Budget uncertainty. 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. We will publish our assessment once the measures are confirmed.
1. Capital Gains Tax: a smaller rise, not alignment
The Financial Times reported on 13 October that the Chancellor will not align CGT with income tax, though a smaller rise from today's 18% and 24% rates remains possible. Any increase would lift the intrinsic value of EIS deferral relief, which postpones a gain, and SEIS reinvestment relief, which exempts half of a reinvested gain. The countervailing risk is behavioural: investors who sit on assets to avoid a higher bill realise fewer gains to reinvest.
2. A new relief for founders who reinvest
The same reporting suggests the Treasury is developing a CGT relief to encourage entrepreneurs who sell their businesses to reinvest in the UK. The formal response to last November's call for evidence on tax support for entrepreneurs may arrive alongside it. Design is everything. A relief that works through EIS and SEIS could bring experienced founders and fresh capital into the schemes; a standalone alternative could instead compete with them for the same money.
3. Inheritance Tax: will business relief be revisited?
Since April, 100% business relief has been capped at £2.5 million per person, an allowance that qualifying EIS and SEIS holdings share with family businesses and farmland. The Prime Minister has said he will “look again” at the farming changes, and campaigners want business relief included. A higher cap would strengthen the estate-planning case for EIS; a farm-only fix changes little. With unused pensions entering IHT from April 2027, estate planning is high on advisers' agendas.
4. Regional growth funds and follow-on capital
The Prime Minister has promised more detail at the Budget on “good growth funds”, pooling public money in each region to attract private investment. These build on £1 billion for regional innovation and the British Business Bank's new £150 million Northern Scale-Up Fund. For EIS and SEIS managers, the question is follow-on capital: more public co-investment can make later rounds easier to fill, but poorly targeted schemes could crowd out private investors at the earliest stages.
All four watchpoints rest on reporting or formal government statements dated between November 2025 and 15 October 2026. None is a confirmed Budget measure.
Important Information:
This article is for general information only and does not constitute tax, legal or investment advice. It describes reported possibilities as at 16 October 2026, not confirmed policy. 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).