Navigating the Future of Retirement and Pension Planning

Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS), Venture Capital Trusts (VCTs), and Business Relief (BR) investments were established by the UK government to encourage capital flow into early-stage, growth-focused, and privately owned businesses critical to the country’s development.

Powerful tax incentives for early-stage investing

These initiatives have channelled billions into early-stage and privately-owned businesses, creating jobs, drive innovation, and support regional development. To help balance the higher risks associated with these investments, all four schemes offer powerful tax incentives. SEIS investors benefit from 50% income tax relief, tax-free growth on gains, the ability to exempt half of capital gains reinvested, and loss relief, making it attractive for very early-stage investments on investments up to £200,000 a year. EIS investors can invest up to £2 million a year and enjoy 30% income tax relief, tax-free growth on gains, the ability to defer existing capital gains, loss relief, and 100% inheritance tax (IHT) relief after two years (up to £1 million post April 2026). Meanwhile, VCT investors receive 30% income tax relief on investments up to £200,000 per tax year, tax-free dividends, and no capital gains tax on disposal of VCT shares. BR investments, typically into qualifying unlisted or AIM-listed trading companies, offer up to 100% inheritance tax relief after a two-year holding period, making them an effective tool for estate planning while supporting UK business continuity.

The lasting impact of the EIS scheme

Since its inception in 1994, the EIS scheme has mobilised over £32 billion into more than 56,000 UK startups and scaleups, helping to drive innovation, job creation, and regional economic development. According to the 30th Anniversary report by Beauhurst and the Enterprise Investment Scheme Association (EISA), EIS-backed companies generated £192 billion in revenue between 2014 and 2023 and supported an estimated 386,000 jobs in 2023 alone. The scheme has significantly contributed to UK innovation, with nearly 80,000 patents filed by investee companies since 2014. EIS has proven to be a key driver behind some of the UK’s most successful high-growth businesses-46% of the UK’s unicorns (privately held companies valued at over $1 billion) have received EIS funding at some point in their journey, underscoring the scheme’s role in nurturing globally competitive, high-impact ventures. Notably, companies such as Deliveroo and Revolut both benefited from EIS investment in their early stages, using the support to accelerate growth and become market leaders in their respective sectors. The government has extended the EIS's sunset clause to 2035, reaffirming its role as a cornerstone of the UK’s entrepreneurial and economic ecosystem (Beauhurst & EISA, 2024).

VCTs: Fueling small businesses across the UK

VCTs have played a pivotal role in supporting the UK economy by funding over 1,100 smaller companies, many of which would have struggled to secure traditional financing. According to the Association of Investment Companies (AIC), VCTs raised in excess of £4.6 billion over the last five years, with £895 million raised in the 2024/25 tax year making it the third highest fundraising year on record despite prevailing economic uncertainty. Beyond capital, VCT and EIS managers provide strategic expertise, operational guidance, and access to networks, which has helped many portfolio companies scale rapidly. These businesses have collectively supported the creation of over 100,000 jobs, contributing not just to innovation but also to regional economic development across the UK. The government’s extension of VCT tax reliefs until 2035 further reinforces their role as a long-term driver of entrepreneurship and economic growth.

Standout success stories

MICAP has surveyed fund managers to identify some of their most impactful investments, and several managers have shared notable examples across their EIS and VCT offers to give an example of the type of company an investor could have within an EIS or VCT portfolio. Molten Ventures EIS invested in Endomag, a UK-based medical technology company whose magnetic devices improve breast cancer care. We are informed it has been installed in over 1,350 hospitals in over 45 countries globally. Additionally, Green Angel Ventures Climate Change Fund (EIS & SEIS) has backed NatureMetrics which uses environmental DNA (eDNA) technology to monitor biodiversity, providing organizations with accurate, scalable data and insights to assess, manage, and report on the health of ecosystems.

There are some notable examples among the responses received from VCT managers. Pembroke VCT invested in Transreport, a company transforming accessible travel through its Passenger Assistance technology, which has supported over 7 million journeys across the UK rail network. Meanwhile, the Foresight Technology EIS & VCT invested in Open Bionics, a developer and manufacturer of bespoke bionic limbs whose mission is to make advanced prosthetics globally accessible and affordable. British Smaller Companies VCT has backed StormHarvester, an AI-powered platform addressing the UK’s water pollution crisis by optimising wastewater management with predictive analytics. StormHarvester helps prevent flooding, reduce pollution-playing a vital role in protecting aquatic ecosystems and responding to increasing public concern over sewage discharges.

Business Relief: Powering the green and regional economy

MICAP’s data for the BR sector specifically, shows that approximately £1.69 billion is currently invested in wind energy, £1.57 billion in solar energy and around £5 billion in the property market (across both debt and equity). This is in addition to investments in forestry, fibre broadband, care homes, as well as several other sectors. These investments make a significant contribution to the UK economy and support the government’s housebuilding and net zero ambitions. Moreover, the top five BR managers by AUM collectively hold energy assets generating around 4.2 GW of electricity each year, enough to power 1.54 million homes, based on Ofgem data. In addition, the 31 AIM BR managers listed on MICAP collectively manage around £5 billion in AUM, providing vital investment into UK small and micro-cap companies.

Conclusion: Tax-Advantaged investing for a stronger future

Tax-advantaged investments such as EIS, SEIS, VCTs, and BR have been powerful tools for investors and the broader UK economy. The generous tax reliefs-ranging from upfront income tax relief and tax-free growth to inheritance tax mitigation-help balance the inherent risks of early-stage and private company investment, making these options increasingly attractive in today’s economic climate. These investments have channelled billions into sectors critical to the UK’s future, driving job creation, regional development, and progress toward net zero goals.

Get in touch:

For further insights or due diligence tools, MICAP offers comprehensive platform-based comparisons of EIS, SEIS, VCT, and BR products to support financial advisers in making well-informed recommendations. For more information visit https://micap.com/