Moray Wright writes in Professional Adviser on the growing EIS case for the right investors. Read the full article here.
For years, investors have been able to think about pensions as both saving for retirement and efficient estate planning for the future. From 6 April 2027, that calculation changes.
Most unused pension funds will be brought into scope for inheritance tax (IHT), a shift that will alter how many investors think about pensions, and the transfer of wealth across generations.
The changes will not mean that pensions suddenly become unattractive. Far from it. They remain one of the most powerful long-term savings structures available. But it does mean that the role pensions play in intergenerational planning is changing. And when the role of one wrapper changes, attention should naturally turn to others.
That is where the Enterprise Investment Scheme (EIS) enters the conversation with new prominence.
This coming April, the amount of EIS funding companies can raise under the initiative will significantly increase. Annual company limits will rise to £10m, or £20m for knowledge-intensive companies, while lifetime limits grow to £24m and £40m, respectively. Effectively doubling the limits will help scaling businesses secure follow-on capital for growth. Critically, it also broadens the investment case for clients and advisers. EIS can now increasingly be seen not only to access early-stage businesses, but as a route into a pipeline of scaling, innovation-led UK companies.
Unlike pensions, the tax features for EIS remain unchanged. The scheme will continue to offer up to 30% income tax relief for qualifying investments, and realised growth can be free of capital gains tax (CGT) if the relevant conditions are met. Separately, shares in EIS companies can qualify for up to 100% Business Relief if held for more than two years, which is why EIS can now play an important role in inheritance tax planning.
In addition to the more attractive tax picture following changes to IHT, EIS investing also often encompasses wider benefits. It is not only a tax efficient answer to long term planning, but investing also increases capital flowing into the sectors that will shape the economy and society investors will one day retire into.
That matters because retirement planning is not only about preserving private wealth. It is also about the world that wealth helps create. An investor in EIS is backing the country’s most innovative companies – those changing our health systems, environment and industries.
For example, an EIS investment may include life sciences companies working on new therapies, diagnostics, and medical technologies that could improve health outcomes across the country. Or, it may be funding AI businesses that help make firms more productive, strengthen public services or accelerate scientific discovery. In other words, many EIS companies – especially Knowledge Intensive companies – are helping to build the conditions for a better retirement as well as a better estate outcome.
Too often, EIS is discussed purely through the lens of reliefs, limits, and holding periods. Those things matter, of course. This is a higher risk asset class, and it demands careful suitability assessment and robust due diligence. But investors increasingly want to know not just how an investment is taxed, but what it is doing in the real economy.
In that respect, the broader policy backdrop is becoming even more supportive. The government has already committed substantial support to frontier technologies including AI and quantum. And it is going further. During the chancellor’s Mais Lecture this week Rachel Reeves pledged to make the UK the fastest AI adopter in the G7, and announced £2.5bn in support for quantum, as well as further backing for the Oxford-Cambridge Corridor – an initiative that aims to create the UK’s “Silicon Valley” and will directly benefit EIS funded university spinouts in the region. Growing government support, in part, helps to make select EIS investments more attractive as these companies have growing access to public funding, and the infrastructure needed to scale further and faster.
For advisers, the implication is that 2026 should not be treated as business as usual. It is the year to ask whether assets that were once being preserved for efficient transfer could now be redeployed more actively. And it is the year to consider whether EIS should play a larger role as part of broader long-term planning.
To read the full article on Professional Adviser, click here.