As tax-efficient investing moves into a new phase, advisers are being asked to navigate a far more complex mix of policy change, client demand and portfolio construction than in previous years. The 2025 Budget announcements, combined with the inclusion of pensions in estates for IHT from 2027, have brought EIS, VCTs and Business Relief into much sharper focus. What were once often used as year-end tax tools are now being discussed as longer-term components of wealth and estate planning.
To capture how this is playing out across the market, TEI spoke to a range of industry participants, from fund managers and investment houses to independent researchers and trade bodies. Their perspectives highlight where demand is rising, where caution remains, and how advisers are adapting their approach as 2026 approaches. Together, these voices offer a practical snapshot of how tax-efficient investing is being used on the ground, and how its role within client portfolios continues to evolve.
A new IHT landscape
Rising inheritance tax pressures and recent Budget changes have fundamentally reshaped how advisers approach estate planning. Business Relief is no longer a niche tool, but a central part of conversations about wealth preservation and intergenerational planning.
Hugi Clarke, Partner, Foresight, says:
“The UK is entering a new era of IHT planning. Recent Budget changes and expanded Business Relief (BR) allowances have reshaped the landscape, as the IHT burden on families continues to rise. For many clients, traditional planning routes may no longer suffice.
“This shift creates both risk and opportunity for advisers. Clients are increasingly aware of the growing IHT challenge, and if advisers aren’t addressing it proactively, they may look elsewhere. BR is now central to these conversations, offering a proven way to mitigate IHT within a relatively short timeframe while maintaining access and control – key priorities for investors.
“Foresight’s research shows advisers are responding, with 63% using an unquoted BR-qualifying investment in the past 12 months. Beyond tax efficiency and good client outcomes, BR supports client retention by helping families preserve wealth, enables earlier engagement with heirs, and strengthens intergenerational planning – all of which can drive adviser growth.
“As BR has expanded, so has Foresight’s offering. Today, we provide three unquoted BR solutions to meet different client needs, from higher return potential to immediate IHT protection via an insured option.
“Looking ahead, the question for advisers isn’t whether BR has a role, but whether their approach – and provider – fits this new IHT reality.”
EIS in a changing market
As VCT rules evolve and investor appetite shifts, EIS is increasingly being positioned as a growth-focused alternative, particularly in areas such as deep tech, life sciences and university spinouts.
Moray Wright, CEO, Parkwalk, comments:
“It’s encouraging to see the UK government continue to back founders through initiatives such as the Mansion House pension reforms, the Accord, and the expansion of EIS funding limits – particularly the increase in lifetime limits for Knowledge Intensive companies, which is excellent news for Knowledge Intensive EIS Funds.
Looking ahead to the 2026/27 tax year, Parkwalk aims to build on a strong year of exits in 2025 and continue supporting over 200 pioneering deeptech, cleantech, and healthtech university spinouts. With impending changes to VCT, we anticipate a growing appetite for EIS funds – especially those managed by teams with a proven track record and a KI EIS offering, as they provide a natural next step for investors seeking a diverse portfolio of tax-efficient opportunities, with minimal administrative burden.”
Michael Theodosiou, Investment Manager, Symvan Capital, says:
“The early-stage market had another challenging year from the perspective of fundraising, valuations, and liquidity, although there were positive signs. At the same time, the frenzied hype around AI has swept up founders and funders alike, and while there are huge opportunities to build genuinely game-changing companies, we expect much of the froth will fall away, as happened in the dotcom boom. We continue to see signs that companies focused on delivering on fundamentals and who display the resilience needed to battle through tough times give themselves a very strong foundation from which to achieve growth without being purely dictated to by wider market swings.”
The adviser workload is rising
As more assets fall under the IHT umbrella and planning becomes more complex, advisers are facing growing client demand and the need to guide people through multiple overlapping changes.
Diana French, Chief Commercial Officer – Retail Distribution, Triple Point, says:
“It is likely to be a busy start to the year for VCTs and for investors wishing to make the most of the 30% upfront income tax relief available in the current tax year, ahead of the reduction to 20% from April 2026. Historically, we tend to see strong levels of engagement as investors review their tax positions ahead of year end, and we expect this to continue as tax-efficient planning remains a priority.
“Momentum around inheritance tax planning is also set to increase. With the introduction of the unquoted Business Relief allowance in April 2026, and as more advisers turn their attention to IHT planning in the run-up to pensions coming into scope for IHT, these conversations are becoming increasingly front of mind. As a result, more advisers are exploring tax-efficient options as part of their clients’ longer-term planning.
“Taken together, these changes mean advisers are likely to be busier than ever. This evolving landscape presents a significant opportunity for advisers to demonstrate their value by proactively guiding clients through these changes and identifying strategies that support long-term financial security.”
Budget resets and investor behaviour
While adviser sentiment remains broadly positive, market data and previous policy changes suggest investor behaviour may shift sharply as new rules come into force.
James Cook, Investment Analyst, MICAP (Defaqto) comments:
“For 2026/27 and beyond, tax-advantaged investments will be impacted by the 2024 and 2025 budgets.
“From 6 April 2026, the budget announced a cut in VCT income tax relief for new shares from 30% to 20%. The government has also raised the lifetime and annual limits on the amounts that companies can receive under EIS and VCT schemes. According to a Wealth Club survey of high-net-worth investors reported in IFA Magazine, 41.6% of investors said they would not invest, while 43.5% would invest less in VCTs once the changes were introduced. Industry lobbying for a reversal of these proposals is already underway. Only time will tell the impact.
“From 6 April 2027, unused pension funds and pension death benefits will be included in an individual’s estate for IHT purposes, forcing a change in estate planning. This may prompt investors to reconsider both their overall portfolio and expected IHT liability and explore alternatives like Business Relief. Inflows into this area are expected to increase despite the 2024 Autumn budget introducing changes from 6 April 2026, reducing relief for AIM listed BR qualifying investments to 50% and unlisted BR qualifying investments to 50% over £1 million from the existing 100% relief.”
VCTs after the relief cut
The VCT relief cut has created short-term uncertainty, but changes to investment limits are giving managers more flexibility to support their strongest companies.
Nick Britton, Research Director, Association of Investment Companies, says:
“There was good and bad news for VCTs in November’s Budget. They got a long overdue increase to their investment limits, which had not been adjusted for inflation for over a decade. However, this came at a hefty price: a cut in VCT tax relief from 30% to 20%.
“This is naturally going to hit fundraising in the 2026/27 tax year. We would expect a boost to fundraising during the rest of the current tax year, given that 30% tax relief is still available until 5 April, after which it will drop sharply. Last time there was a cut to VCT tax relief, fundraising fell by two-thirds. It’s worth remembering that VCT dividends remain tax-free – which is going to become still more valuable when the 2p hike to dividend tax comes into effect in April.
“The increases to investment limits are a big plus for VCTs. They are not trifling increases – in most cases the limits have doubled. They will allow VCTs to make follow-on investments in their most successful companies, which had been a problem because the limits had not kept up with inflation.”
Adviser tools for a more complex future
Despite rule changes, many providers believe tax-efficient investments will remain central to adviser planning, particularly as clients engage earlier and more actively with tax and estate issues.
Kristy Barr, Co-Head of Retail, Octopus Investments, comments:
“The Autumn Budget brought tax-efficient investments firmly into the spotlight for advisers when considering their clients’ planning for 2026/27 and beyond. Whilst the economic and geopolitical backdrop may be uncertain, one thing is clear and that is that more people will need help with estate and tax planning going forward.
“With the pension changes looming, now is the time for advisers to engage with their clients and beneficiaries on estate planning. 2026 should see Business Relief become a mainstay as an efficient and effective tool to help suitable clients fulfil their wishes to pass assets to the next generation. It should also be a time when we start to see clients wanting to engage on tax and estate planning earlier and more actively.
“As for VCTs, while the Budget reduced the tax reliefs for investors from next year, they still offer incentives that can help suitable clients with effective tax planning. VCTs offer tax-free growth opportunities and dividends too. The amount an investee company can raise under VCT qualifying rules will double from 6 April 2026, which means VCTs can continue to back companies they believe in and at later stages of maturity, diversifying the risk profile of underlying companies.
“So, we’re going to dive into the year with even more support, tools and solutions to help advisers utilise tax-efficient investments as they continue to provide investors with effective estate planning tools and a greater opportunity for tax-free growth and dividends.”
What next for tax efficient investing?
Across the market, the message is consistent: tax-efficient investing is not disappearing, but it is changing. The relief cuts and pension reforms announced in recent Budgets have created uncertainty, but they have also pushed advisers and investors to think more strategically about how EIS, VCTs and Business Relief fit into longer-term planning. Inheritance tax, in particular, is moving rapidly to the centre of advice conversations, driving demand for solutions that combine tax efficiency with flexibility and control.
At the same time, the focus on private-market growth, deep tech and innovation shows that performance and impact still matter alongside tax. For advisers, this creates both opportunity and responsibility. Those who understand this evolving landscape, select providers carefully and engage clients early will be best placed to add value in a more complex planning environment. As 2026 begins, tax-efficient investing looks less like a niche and more like a core part of modern wealth and estate planning.
This feature was part of our 2026 Tax-Efficient Investment Insights publication – a refreshed and reimagined publication that we have developed with advisers firmly in mind. You can download your copy of the publication here.
