Autumn Budget 2025 Tax Relief Reduced on Venture Capital Trusts
Published / Last Updated on 29/11/2025
Chancellor Rachel Reeves confirmed that from April 2026, the government is increasing company investment limit for Venture Capital Trusts (VCT) and Enterprise Investment Schemes (EIS) to £10m and for Knowledge Intensive Companies (KIC) to £20m. This is not the amount you can invest but the amount a VCT or EIS can initially invest in a developing/start-up company. The lifetime limit that a VCT or EIS can invest in one company will also increase to ￡24 million, and ￡40 million for KICs. This is to allow for follow-on investments as the start-up company develops/grows.
Tax Relief Reduced for VCTs
Tax relief for VCTs will be cut from 30% to 20% whereas EIS investment relief will remain at 30%. Mrs Reeves cited that VCTs currently have an advantage over EISs in that dividend distributions are subject to Dividend Relief i.e., no income tax to pay whereas EIS dividend distributions are subject dividend tax rates (after the £500 tax free dividend allowance) that increase in April 2026 at 8.75% (for basic rate taxpayers but increasing to 10.75% next year), 33.75% (higher rate taxpayers and increasing to 35.75%) and 39.35% (for additional rate taxpayers but not increasing).
|
Income tax |
EIS |
Small EIS |
VCT |
|
Income tax relief |
30% |
50% |
30% (reducing to 20% in April 2026) |
|
Maximum investment per year |
£1,000,000 |
£200,000 |
£200,000 |
|
Knowledge Intensive companies |
£2,000,000 |
n/a |
n/a |
|
Carry back available? |
Yes |
Yes |
No |
|
Holding period |
3 years |
3 years |
5 years |
|
Tax-free dividends |
No |
No |
Yes |
|
Relief for losses against income |
Yes |
Yes |
No |
