SyndicateRoom, the data-driven venture capital fund manager, has recorded a tenfold (10x) increase in investor enquiries specifically targeting ‘carry back’ tax relief through its Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) funds, with its Carry Back EIS Fund I a particular focus of interest.
As the 5 April 2026 tax year-end approaches, sophisticated investors are moving beyond basic tax mitigation. Instead, they are aggressively using carry-back provisions to offset liabilities from the previous tax year, effectively ‘reaching back’ to reshape their prior tax positions. Investors are increasingly turning to these structures to manage rising tax bills, support high-growth UK companies and make more efficient use of their annual allowances, particularly in light of cuts to Venture Capital Trust (VCT) income tax relief from April 2026.
“Carry back has moved from a technical footnote to a front-and-centre planning tool this year,” said Tom Britton, SyndicateRoom Co-founder. “Higher effective tax rates, frozen thresholds and volatile income are forcing affluent investors to look harder at every available relief. With VCT relief reducing from 30% to 20% on new subscriptions from April 2026, the ability to claim 30% EIS or 50% SEIS income tax relief and carry it back to the previous year is making these schemes stand out in current planning.”
Drivers of rising carry-back interest
Rising tax drag on investors
With capital gains tax (CGT) receipts and the overall tax take rising, more investors are facing larger income and capital gains liabilities than in previous years. EIS and SEIS allow qualifying investors to reduce income tax due on the current or previous year and, in many cases, to defer or reinvest CGT, making carry back especially attractive for those affected by high tax bills.
Frozen thresholds and fiscal drag
The freeze on income tax thresholds and allowances is expected to raise billions in additional revenue and push hundreds of thousands more people into higher and additional-rate bands, a phenomenon widely described as “fiscal drag”. Being able to carry EIS or SEIS relief back to a year in which an investor was in a higher band can significantly improve effective after-tax returns.
Shift in the relative appeal of VCTs versus EIS/SEIS
From 6 April 2026, upfront income tax relief on new VCT investments is scheduled to fall from 30% to 20%, while EIS and SEIS reliefs remain at 30% and 50% respectively. This change is prompting advisers and investors to reassess the balance of their tax-efficient portfolios, with some reallocating part of what would previously have been VCT subscriptions into EIS and SEIS to preserve higher relief levels. The ability to carry EIS and SEIS relief back to the previous tax year, something not available in the same way with VCTs, is further enhancing the comparative attractiveness of these schemes.
One-off planning window before rule changes
Recent and forthcoming changes to other tax-efficient products, including the reduction in VCT relief from April 2026, have sharpened adviser focus on maximising still-generous EIS and SEIS reliefs. Guidance for 2025/26 and 2026/27 increasingly positions EIS and SEIS as central tools for mitigating higher income tax and CGT bills, encouraging investors to use carry back while current rules apply and before the relative advantage over VCTs potentially narrows in future reforms.
Growing awareness of multi-year planning
Professional materials and explainer content now frame EIS and SEIS as part of multi-year tax planning, rather than single-year “use it or lose it” decisions. Carry back fits naturally into this approach, allowing investors to smooth irregular income, match relief to the years with the highest tax pressure and build a consistent annual allocation to early-stage companies.
Demand for real-economy impact
Investor appetite for portfolios that back innovation, productivity and the green transition remains strong, and EIS/SEIS are highlighted as routes to back UK start-ups and scale-ups in sectors such as technology, life sciences and clean energy. The ability to combine this impact with immediate tax benefits – including carry back and, in some cases, CGT advantages – makes these schemes particularly compelling for higher-rate taxpayers, especially now that the headline VCT relief is set to be lower.
Graham Schwikkard, SyndicateRoom CEO, “For higher-rate taxpayers and entrepreneurs, the combination of upfront relief, potential CGT advantages and the ability to reach back into the prior tax year is powerful. With VCT income tax relief stepping down, EIS and SEIS – particularly when used with carry back – are increasingly seen as the cornerstone of tax-efficient investing for those willing to back early-stage businesses.”
To learn more about the world of tax-efficient investments, be sure to check out our recent Tax-Efficient Investment Insights!
