The Enterprise Investment Scheme (EIS) offers UK taxpayers some of the most generous tax reliefs on the planet. However, for years, Venture Capital Trusts have been the more comfortable choice for many advisers seeking to provide clients with tax efficiency. Being listed vehicles, being available on familiar platforms, push-button applications and integrated reporting made VCTs feel effortless.

They offered a neat solution for clients seeking tax efficiency, and for advisers, they slotted seamlessly into established workflows. But the landscape is changing. From 6 April 2026, the upfront income tax relief on new VCT subscriptions will fall from 30% to 20%, breaking a decades-old parity with EIS. That single adjustment invites advisers to take a fresh look at the Enterprise Investment Scheme, and to challenge some long-held assumptions about complexity. 

The truth is that EIS has never been easier to process. Over the past few years, fund managers have invested heavily in technology, creating online portals that mirror the simplicity advisers have come to expect from platforms. Digital applications, e-signatures, integrated AML checks and downloadable EIS3 certificates are now standard. Consolidated tax reporting, once a headache, is now delivered in formats that drop straight into paraplanning workflows. In short, the administrative gap that once made VCTs feel “safer” for the adviser has all but disappeared. 

This matters because EIS offers a suite of tax reliefs that VCTs cannot match. Income tax relief remains at 30%, up to £1 million per tax year, or £2 million where at least £1 million is invested in knowledge-intensive companies. Beyond that, EIS brings complementary benefits, including CGT deferral relief, CGT-exempt growth, IHT mitigation through Business Relief after two years, and share loss relief. These reliefs open multiple planning angles. Clients can offset income tax now while deferring gains from the past three years or the coming year. They can target growth knowing that, after three years, disposals are CGT-free provided conditions are met. They can mitigate inheritance tax by holding qualifying shares for two years. And if an investment disappoints, loss relief offers a measure of downside protection. 

Contrast that with VCTs. While they retain attractive tax-free dividends and CGT-free growth, the cut in upfront relief will likely narrow their appeal for clients whose primary objective is income tax reduction at entry. For those clients, EIS may now be the more compelling option, particularly when the breadth of reliefs is factored in. 

Of course, many advisers have historically leaned toward VCTs, not only for risk or liquidity reasons, but because the admin was easier. Platform availability and integrated processing made VCTs feel frictionless: suitability letters, orders, confirmations and valuations flowed through familiar systems, and the annual tax pack arrived pre-formatted. That convenience sometimes tipped the scales, even when EIS might have delivered better client outcomes. Going forward, that rationale will be harder to defend. With VCT relief falling to 20%, cases that were previously “on the margin” may now tilt decisively toward EIS. And with modern portals and reporting tools, the old argument about complexity simply won’t hold. 

Liquidity has been another potential sticking point. The slowdown in UK IPOs over recent years was well publicised, dampening exit pathways across many venture portfolios. Recent years have seen historically low volumes of Initial Public Offerings in London, but the picture may be changing. The Mansion House Accord, signed by workplace pension providers representing around 90% of active DC savers, commits to allocating 10% of default funds to private markets by 2030, with at least 5% ring-fenced for UK assets. That could channel £25 billion into UK businesses, supporting the very scale-up companies that EIS funds back. Alongside reforms to listing rules and a broader policy push to unlock domestic capital, these moves promise to re-energise UK equity flows. For EIS investors, that means improving exit optionality, trade sales, secondary transactions and, eventually, IPOs, and translating into better outcomes over time. 

So, what does this mean for advisers? It means that recommendation behaviour must evolve. Ease should never trump outcomes. If EIS provides the right client outcome, advisers have a duty to step past old perceptions and embrace the digital processes now available. That starts with mapping the workflow, sitting down with EIS managers, walking through their portals and understanding how application, AML checks, client money handling and EIS3 issuance fit into your compliance framework. It means standardising suitability templates to capture risk, capacity for loss, liquidity expectations, and the specific tax outcomes sought, aligning everything to Consumer Duty requirements. It means segmenting clients intelligently, identifying those with crystallised gains to defer, entrepreneurs seeking Business Relief, and growth-oriented investors comfortable with venture risk and longer holding periods. Plus, it means planning reporting upfront, agreeing the cadence and format for updates and tax packs so they slot neatly into your annual review rhythm. 

Education is critical too. Clients need to understand the timelines, the risks and the potential rewards. Transparency reduces surprises later and builds confidence in the advice process. HMRC’s own help sheets and guidance make this easier than ever, and providers are increasingly co-branding materials to support adviser-client conversations. 

The takeaway is clear. With VCT income tax relief set to fall to 20%, the long-standing parity with EIS disappears. Meanwhile, EIS administration has modernised to the point where it is straightforward to advise and process. Layer on multiple, complementary reliefs and a policy tailwind seeking to channel more UK capital into innovative sectors, and the case for re-centring EIS in the adviser toolkit is strong. For clients who value tax efficiency aligned with growth and innovation, EIS has never been more accessible, and post-Budget, never more relevant. 

Let’s face it: the days when ease of administration could justify a recommendation are over. If EIS is the right solution for the client, advisers must be ready to act. Providers like Deepbridge will continue to make everything as simple as possible, provide acclaimed training, and be there to support you, but the first step is yours. The tools are there. The EIS opportunity is clear.  

Important note: Tax treatment depends on individual circumstances and may change. EIS and VCT investments are high-risk and illiquid; capital is at risk and returns are not guaranteed.  

Andrew Aldridge is Chief Operating Officer at Deepbridge Capital

Published in Professional Adviser, January 2026