If building a portfolio is like picking a football team, it can be tempting to try to grind out a nil‑nil. The portfolio could have a packed defence with gilts and blue‑chip funds, add a couple of cautious midfielders, and then wonder why they’re not scoring against rising tax bills.

The truth is that even a defensive strategy needs a striker; something that can chase growth, stretch the opposition and, crucially, convert opportunities. For UK clients, the Enterprise Investment Scheme (EIS) could be that striker. After all, would England fans be excited about the upcoming World Cup without Harry Kane? And with the new tax landscape kicking off in April 2026, EIS should be in every adviser’s pre‑match talk.

The Autumn Budget confirmed that Venture Capital Trust (VCT) upfront income‑tax relief will drop from 30% to 20% from 6 April 2026, while EIS remains at 30%.  At the same time, the Government is widening the eligibility nets for scaling companies, increasing EIS and VCT company size and fundraising limits from 2026, making it easier for high‑growth UK businesses to raise capital under these schemes.  For advisers, that creates a clear tactical shift: EIS keeps its 30% relief and access to a broader investible universe, precisely as VCT relief becomes less generous.

Whilst considering portfolio changes, EIS offers two powerful capital‑gains tools. First, disposal relief means gains on EIS shares themselves can be free of CGT if the shares are held for at least three years and the investor received income‑tax relief. Second, and often overlooked, deferral relief allows a gain from any asset to be deferred by reinvesting into EIS shares; effectively postponing CGT until the EIS position is sold or ceases to qualify. HMRC’s own help sheet HS297 spells this out, and confirms there’s no upper limit to the amount you can defer.  That’s why, in a routine rebalance that accidentally crystalises a gain, even a £10,000 EIS subscription can be a useful tool offering 30% income‑tax relief up front, plus the ability to mop up a CGT liability via deferral.

EIS qualifying companies also meet the conditions for Business Relief (BR), which can remove or reduce the shareholder’s IHT burden once held for two years.  That two‑year clock is vital for clients concerned about the inheritance‑tax burden, and while BR rules themselves are being tightened from April 2026 (including a cap and a shift for AIM shares), EIS investments in unquoted trading companies continue to offer a clear route to IHT efficiency within the updated framework.  To go back to the football analogy, EIS is the clinical forward who not only scores but also defends from the front.

Consider clients rebalancing with total investable assets of £200,000. Many advisers will recognise this segment as the FCA’s latest Financial Lives shows a substantial cohort of mass‑affluent investors with investable assets above £100,000.  Industry data also shows advice practices increasingly setting minimum asset thresholds, often north of £200,000, as Consumer Duty workloads bite. Indeed, Octopus Money’s 2024 research cites an average minimum now around £214,000.  The point is this; across the advised spectrum, from mass‑affluent to £200k+ investors, even just a £10,000 EIS allocation could be an extremely useful tool to help mitigate tax and provide investors with the attack-minded asset they need in a well-balanced portfolio – the potential goalscorer if you will! It is a flexible tool that can absorb a rebalancing‑related gain (via deferral), deliver 30% income‑tax relief that’s not scheduled to change in 2026 (unlike VCTs which will decrease to just 20%), and add differentiated exposure to UK venture, without forcing a wholesale change in the portfolio’s risk rating if used in appropriate proportion.

Diversification is often described in abstract terms, but EIS can provide real and tangible diversification. Traditional multi‑asset line‑ups can leave portfolios overly correlated to listed markets and interest‑rate cycles. An EIS element, however small a percentage, introduces early‑stage, high‑growth UK companies, which are exactly the part of the market that is structurally different from mainstream holdings. With the company‑size and fundraising cap increases landing in 2026, that investible pipeline is getting deeper, not thinner.  For defensive investors, the objection from their advisers is familiar, “I don’t have any client with the risk appetite for EIS.”  Yet a defensively rated portfolio can still accommodate a controlled EIS allocation with some careful planning. The risk is ring‑fenced by position sizing, the tax reliefs could potentially mitigate downside, and this approach could improve after‑tax outcomes, and, significantly, the CGT deferral can help tidy up liabilities created elsewhere by crystallising previous successful investments.

None of this suggests abandoning caution. EIS remains high risk and illiquid, and due diligence on managers, deal flow, and exit pathways is non‑negotiable. But if you’re rebalancing for clients this quarter, advisers should be aware of how they could be enhancing portfolios and reducing tax liabilities. Even a small EIS allocation, with EIS managers often accepting applications from as little as £10,000, can clean up CGT from a rebalancing, bring 30% income‑tax relief that outlives the VCT downgrade, and add a genuine growth opportunity.

Do investors really want a back five, and two holding midfielders, or do even the most cautious investors also want the opportunity to benefit from a Lionel Messi or Cristiano Ronaldo?

Andrew Aldridge is Chief Operating Officer at Deepbridge Capital