Expansion of EIS Limits: Implications for Founders

Founders looking to raise EIS investment in 2026 should be paying attention to the changes to the Enterprise Investment Scheme (EIS) introduced in the Chancellor’s Autumn Budget. While much of the recent market commentary has focused on broader tax adjustments, the amendments to the EIS limits will result in a structural shift for the UK’s early-stage investment landscape.

From April 2026, the government will implement significant increases to the EIS thresholds.

The New Thresholds (Effective April 2026).

The new limits proposed in the Finance Bill 2025-2026 raise the ceiling of the scheme. The thresholds have been increased as follows:

• The Annual Investment Limit increases from £5m to £10m per company (and up to £20m for Knowledge Intensive Companies).
• The Lifetime Limit increases from £12m to £24m per company (and up to £40m for Knowledge Intensive Companies).
• The Gross Assets Test changes so that the pre-investment gross asset limit rises from £15m to £30m, and the post-investment gross asset limit rises to £35m.

The revised thresholds extend the lifespan of the EIS, allowing companies further along the investment lifecycle to make use of the scheme.

By raising the Gross Assets Test to £30m, the legislation allows companies to remain within the EIS wrapper for a longer portion of their growth cycle. Companies may now plan for larger EIS funding rounds, retaining access to 30% income tax relief for their investors without being forced into institutional deals too early.

Considerations for 2026 fundraises

Founders and boards preparing for a 2026 fundraise should consider the following:

• Cap table fragmentation – Larger EIS fundraises, if composed primarily of individual investors, can result in a fragmented shareholder base. A large shareholder base adds administrative burden, such as when passing shareholders’ resolutions. Nominee structures are often used, allowing the economic interest to remain with the underlying investors while the company interacts with a single entity for the purposes of voting.
• Drag-along and pre-emption provisions – With a larger shareholder base, the drag-along rights of the Company become critical. The challenge is that standard drag clauses often clash with the EIS three year holding requirement. If you force an investor to sell early, they lose their tax relief. Without drafting to manage this, you risk a scenario where minority shareholders block a deal purely to avoid a tax bill.
• Advance Assurance - Companies with existing Advance Assurance should be aware that these clearances are based on pre-Budget limits. If a company intends to raise capital over the current £5m cap post-April 2026, a fresh application will be required.