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FundingUpdated 2026-02-12

Has EIS been extended beyond 2025?

Quick Answer

Yes. EIS was originally due to expire on 6 April 2025, but the UK government confirmed in the Autumn Statement 2023 that both EIS and VCT reliefs have been extended to 6 April 2035, providing a further 10 years of certainty.

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Detailed Explanation

EIS sunset clause and the 2035 extension

The Enterprise Investment Scheme was originally established with a built-in expiry date known as the 'sunset clause'. This clause meant that EIS income tax relief would no longer be available for shares issued on or after 6 April 2025.

The extension

In the Autumn Statement 2023, the Chancellor confirmed that both the EIS and Venture Capital Trust (VCT) schemes would be extended by 10 years to 6 April 2035. This was widely welcomed by the startup and investment community.

What this means in practice

  • Companies can continue to raise EIS-qualifying investment until at least April 2035
  • Investors can continue to claim 30% income tax relief on EIS investments
  • The extension provides long-term certainty for fundraising planning
  • All existing EIS rules and limits continue to apply

What was NOT changed

  • The SEIS scheme was never subject to a sunset clause and continues indefinitely
  • EIS relief rates remain at 30% (no increase was made)
  • Annual and lifetime limits remain the same
  • Qualifying trade rules, connected person rules, and all other conditions are unchanged

Background: why the extension matters

The EIS scheme has been a cornerstone of UK startup funding since 1994. Industry data shows that EIS-backed companies raised over £2 billion per year in the years before the extension was confirmed. Uncertainty about the scheme's future was cited by investor networks as a barrier to long-term investment planning.

The extension also aligns with government policy on supporting innovation and growth in the UK economy. The Knowledge-Intensive Company provisions, which offer enhanced EIS limits, continue under the same terms.

Future considerations

  • The government may review the scheme before 2035 and make changes to limits or rates
  • Any changes would typically be announced in a Budget or Autumn Statement
  • The extension does not guarantee that the rules will remain unchanged throughout the period
  • Companies should continue to apply for advance assurance for each fundraising round regardless of the extension

Source: HM Treasury Autumn Statement 2023 - Venture Capital Schemes Extension

Real-World Examples

Securing Future Funding Rounds

A tech startup, currently EIS-eligible, is planning a Series A funding round in 2026. The EIS extension ensures investors can still benefit from EIS relief, making the round more attractive and potentially increasing the valuation. This removes uncertainty for both the company and potential investors.

Long-Term Product Development

A biotechnology company developing a novel drug needs significant capital over a long period. The EIS extension allows them to attract EIS investors in multiple funding rounds over the next decade, crucial for supporting lengthy research and development cycles. Without the extension, their funding options would be severely limited after 2025.

Early-Stage Investment Portfolio Strategy

An angel investor building a portfolio of EIS-eligible startups can now confidently invest in companies with longer-term growth horizons. Previously, the 2025 sunset clause may have deterred investments where significant returns were not expected within a 3-5 year timeframe. The extension provides greater flexibility.

Common Mistakes to Avoid

  • Assuming that because EIS is extended, the rules won't change; HMRC can still modify the scheme's regulations.
  • Failing to check if the specific company you are investing in actually meets the detailed EIS eligibility criteria, even with the extension in place.
  • Believing the extension automatically applies to SEIS too; SEIS has its own rules and isn't directly affected by the EIS extension.

Does the EIS extension mean the annual investment limits have changed?

No, the extension only affects the sunset clause. The annual investment limits for both the company raising funds and the investor claiming relief remain the same. Ensure you understand the current limits to maximise the benefits.

What happens if EIS rules change between now and 2035?

The EIS scheme can be subject to modifications by HMRC. Changes could affect qualifying trades, investment limits, or investor eligibility. Stay updated through government announcements and professional advice to ensure continued compliance.

Does the extension automatically mean I can defer capital gains tax for longer?

The EIS extension allows for the possibility of capital gains tax deferral for an additional 10 years. However, the specifics of capital gains tax deferral remain subject to the underlying CGT rules and the EIS conditions being continuously met. Check the current rules.

If my company previously received EIS investment, does the extension affect our existing investors?

The extension primarily benefits future EIS investments made before 6 April 2035. However, existing investors may indirectly benefit from your company's ability to raise further capital under EIS, potentially improving the company's overall prospects and their initial investment.

Practical Tips

  • Review your long-term funding strategy: Update your financial projections and consider how the EIS extension can help you secure further funding rounds over the next decade.
  • Update your investor materials: Clearly communicate the EIS extension to potential investors to highlight the benefits of investing in your company before 2035.
  • Monitor HMRC announcements: Stay informed about any potential changes to the EIS rules and regulations that may occur before 2035 to ensure ongoing compliance.
  • Consult with a tax advisor: Seek professional advice to understand the specific implications of the EIS extension for your company and your investors, considering your individual circumstances.

Related Questions

How much can I raise under EIS?

A company can raise up to £10 million per year under EIS, with a lifetime maximum of £24 million from all venture capital schemes combined (for shares issued on or after 6 April 2026). Knowledge-intensive companies can raise up to £20 million per year with a £40 million lifetime cap.

What is the difference between SEIS and EIS?

SEIS offers 50% income tax relief on investments up to £200,000 in very early-stage companies (under 3 years, under £250k raised), while EIS offers 30% relief on up to £1 million in slightly larger companies (under 7 years, up to £10 million raised per year).

What trades qualify for EIS?

Most trading activities qualify for EIS, but certain trades are specifically excluded including property development, financial services, legal and accountancy services, hotels and guest houses, farming, coal and steel production, and energy generation receiving subsidies.

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