If there’s one thing advisers have learned over the past few years, it’s that every Budget brings a curveball. Some land softly, some smack you right in the kneecaps, and some leave you wondering why you ever trusted pre-Budget rumours in the first place. And the latest announcement certainly delivered its fair share of surprises for the tax-efficient space. Leading voices across the industry have weighed in, and their insights paint a powerful picture of where things are heading.
From tightened allowances to shifting incentives and a big recalibration across VCTs, EIS, SEIS and BR, advisers are now navigating a landscape that’s both more complicated and more opportunity-rich. Investors, meanwhile, are looking for clarity and direction at a time when the tax burden remains near historic highs.
The squeeze tightens
Frozen thresholds, rising taxes and an environment shaped by fiscal drag have now become the backdrop to every planning conversation. As Les Cameron, Head of Technical at M&G, points out, “The autumn Budget increased taxes on property, savings, and dividends, while extending the freeze on income tax bands for three years. This continues the trend toward more tax-efficient investing seen since 2020.”
Investors aren’t just looking for growth anymore; they’re looking for shelter. And with allowances shrinking and more people nudged into higher bands, there’s now a much stronger incentive to consider vehicles that wrap returns in protective tax treatment.
Cameron highlights the renewed appeal of bonds as wrappers, adding, “Insurance bonds, both onshore and offshore, are expected to grow in popularity as they shelter returns from rising taxes… even basic rate taxpayers have a compelling incentive to use insurance bonds to protect and grow their investment returns.”
For advisers, the conversation is shifting. Tax-efficient investing is no longer a niche subset of planning ; it’s becoming a core part of portfolio construction.
Pensions lose some shine
One of the more eye-catching changes was the £2,000 cap on NI relief, which tightens the screws on pension strategies. According to Simon Redman, Head of Product, PATRIZIA, “The £2,000 cap on NI relief will intensify pressure on pension strategies… Broadening investment horizons is no longer optional, and diversifying beyond public markets is essential.”
This pushes more investors to look elsewhere for long-term tax-advantaged growth, and naturally, much of that attention flows into the tax-efficient universe.
EIS is the winner
If there’s one message that echoes across all expert commentary, it’s this: EIS is firmly back in the spotlight.
Many contributors see the changes as a deliberate signal from the Chancellor, a rebalancing of incentives and a push to steer more growth capital into early-stage businesses.
Declan McEvilly, Director & Co-founder of One Planet Capital, says, “The budget’s reaction is positive for EIS demand but forecasts a reduction in total UK Venture Capital funding. VCTs are expected to become less attractive, shifting investor interest and funding toward EIS.”
He adds that the reforms reflect an attempt to recalibrate the risk–reward profile of the schemes, noting, “The author suggests maintaining VCT tax relief at 30% and increasing EIS relief to 40% to better reflect the risk difference.” It’s a sentiment echoed across the industry.
Shane Gallwey, CEO of Guinness Ventures, is clear about the opportunity cost of waiting: “The forthcoming reduction in VCT income tax relief from 30% to 20% is an unwelcome surprise… take advantage of the higher relief while it remains available until 5 April 2026.”
Meanwhile, Moray Wright, CEO of Parkwalk, calls the EIS expansion “pivotal,” stating, “Doubling the Enterprise Investment Scheme limits is a pivotal step… With deeper EIS support, these firms can scale faster and strengthen the UK economy.”
It’s not often you see so many firms aligned: EIS is stepping into a more prominent, more powerful role.
VCTs navigating a reset
With VCT income tax relief dropping from 30% to 20%, investors relying on that upfront perk will need to think fast. But it’s not all doom and gloom.
As Matthew Moynes, Director at Calculus, reminds us, the government is still firmly behind the VCT model: “The Chancellor has consistently expressed support for EIS and VCT legislation… the Budget announcement to raise the annual and lifetime limits… dramatically increase the scope and range of companies which can benefit.” Still, the relief cut matters, and advisers will need to guide clients through the trade-offs.
David Mott, Founder Partner of Oxford Capital, offers one of the clearest interpretations of why this shift happened: “Income tax relief on VCT relief drops to 20% but remains at 30% for EIS, which signals a clear preference for fresh risk capital going through EIS rather than VCT.” In other words: VCTs still have a strong role, but the hierarchy is being redrawn.
SEIS and Knowledge Intensive Companies get room to breathe
Specialist investors, particularly in biotech and high-growth innovation, were especially pleased.
Chris White, Vice President at o2h Ventures, said, “The reduced tax relief offered for VCTs is good news for EIS/SEIS, while the increased annual and lifetime investment limits for both schemes are positive news all round.”
And the uplift for Knowledge Intensive Companies, up to £40m, significantly widens the opportunity set for these businesses.
Business Relief is more relevant than ever
The Budget also confirmed the softening of last year’s BR changes. Transferring unused £1m allowances between spouses means couples can now effectively plan around up to £2m of fully relieved assets.
Peter Steele, Retail Operations Director at Seneca Partners, summarises it well: “It was pleasing to see that any unused £1 million allowance… will be transferable between spouses and civil partners… Relieving payments made under the Infected Blood Compensation and Infected Blood Interim Compensation Payment Schemes from IHT is also most welcome.”
Jon Prescott, Managing Director at PXN Investments, adds that BR is finally stepping out of the shadows: “BR is no longer a niche tool… It’s a mainstream way to plan sensibly for IHT while supporting the UK’s real economy.”
For many advisers, this will become a much bigger part of inheritance planning conversations.
Regional growth and scale-ups finally get more support
A little-discussed but significant change is the expansion of qualifying windows for VCT-eligible companies. This has huge implications for regional businesses.
Jamie Roberts, Managing Partner at YFM Equity Partners, says, “The shift in the VCT qualifying rules to include more established businesses is a real game changer… This kind of policy encourages sustained growth, creates jobs outside the major hubs, and strengthens the ecosystem for entrepreneurs and investors alike.”
This levels the playing field for founders who don’t fit the Silicon Roundabout stereotype.
Industry confidence is rising
Few voices captured the industry mood as clearly as Christiana Stewart-Lockhart, Director General at EISA, who said: “We welcome today’s announcement that the EIS limits will be increased… These extensions will help ensure that more founders scaling their businesses in the UK have access to the crucial investment they need.”
Similarly, Glen Stewart, Head of Business Development at Committed Capital, highlights the adviser opportunity: “With tax thresholds frozen until 2030/31… we expect increased demand for EIS Investments.”
And Andrew Aldridge, COO at Deepbridge Capital, puts it plainly: “The tax burden is still climbing, making tax-efficient investments like EIS and Business Relief more vital than ever. Advisers and investors should act now.”
What advisers should expect next?
The cut to Cash ISAs, the squeeze on salary sacrifice and rising dividend taxes all point in the same direction: more clients will be looking for alternative shelters.
As Prescott puts it, “More retail savers will be nudged into markets… opening up opportunities to utilise the two schemes.”
Meanwhile, Lucy Heath-Thompson, Financial Planner at Rathbones, reminds advisers just how fast things will move: “VCT offers will fill up rapidly ahead of next April… you need to act quickly to secure the current level of tax relief before it drops.”
So, what does this all mean for advisers?
In simple terms:
- EIS is more attractive, more flexible and more central to policy than it has been in decades
- VCTs remain powerful but need repositioning
- SEIS and KIC rules are now significantly more generous
- BR is becoming mainstream
- Pensions have lost some tax appeal
- Clients will need proactive, joined-up guidance more than ever
This is a year where tax-efficient investing moves from the margins into the mainstream — and advisers are the ones best placed to help clients navigate the new rules, avoid pitfalls and seize opportunities.
The Budget may not have delivered fireworks, but it has delivered clarity: the UK wants investment flowing into innovation, scale-ups and long-term productive assets. And advisers are the ones who can show clients how to participate meaningfully and tax-efficiently.
By Jenny Hunter, IFA Magazine’s Deputy Editor.
