This month marks a double celebration for GBI Magazine — our milestone 50th issue and over 10 years of championing tax-efficient investments. Since our launch all those years ago, we’ve been dedicated to showcasing the powerful benefits these dynamic products offer advisers and their clients, from valuable tax breaks to enhancing portfolio diversification through investments in high-potential small and medium-sized UK companies.
Over the past decade, we’ve been delighted to see how the landscape of tax-efficient investing has transformed. Once considered niche, schemes like EIS, SEIS, and VCTs are now integral to savvy financial planning, offering advisers a strategic toolkit for both tax mitigation, ong-term investment growth and income too. While these investments come with inherent risks due to the nature of the underlying investments, the potential for delivering substantial long-term returns and meaningful client outcomes remains as compelling as ever.
We’ve had a front-row seat to this evolution, watching these schemes gain mainstream recognition. The recent extension of the EIS and VCT ‘sunset clause’ to 2035 was a huge win for the industry, reinforcing confidence and stability for advisers and investors alike.
But don’t just take our word for it! We’ve gathered insights from leading industry experts who share their reflections on the past decade and their bold predictions for what’s next in this ever-evolving space. Let’s dive in and explore the future of tax-efficient investing — together.
Christiana Stewart-Lockhart, Director General of the Enterprise Investment Scheme Association (EISA), said:
“Over the last 10 years, these schemes have played a major role in democratising access to early-stage investing and supporting innovative UK companies. Household names including Revolut, Zoopla and Deliveroo received investment through the schemes, as did nearly 50% of UK unicorns (startups worth more than $1billion).
“According to HMRC data, between 2013 and 2023 the number of people investing through the EIS increased by 85%. Over this period, the total amount invested through the EIS each year has nearly doubled, as has the number of businesses securing investment. With increased awareness, especially among younger investors, these schemes are likely to maintain momentum. Successful startup exits are also expanding the pool of experienced angel investors who reinvest into new opportunities, further strengthening the ecosystem.
“A major change was the introduction of increased limits for knowledge-intensive companies (KICs) in 2018, which included a simplified process for those investing through KI funds. Other key changes include significant SEIS limit increases in 2023, doubling the annual investor limit to £200,000 and increasing the amount a company could raise from £150,000 to £250,000.
“The past five years have seen a number of new S/EIS funds launch as well as VCTs, reflecting growing investor interest in these schemes as part of diversified portfolios. In the coming decade, awareness of the schemes is expected to improve further. Educational campaigns targeting underrepresented groups, such as the Women Backing Women campaign and the Regional Angels Programme, will likely be key drivers.
“The government’s extension to the EIS until at least 2035 provides crucial stability for investors and founders, reinforcing its commitment to supporting early-stage businesses. Moreover, with recent announcements around capital gains tax, tax-efficient investments like the EIS and SEIS will become even more integral when considering investment strategies.
“Ultimately, these schemes will remain a powerful force for driving innovation, creating jobs, and supporting high-growth companies across the UK. By fostering greater engagement from a wider range of investors, they will play a vital role in fuelling the next wave of British entrepreneurial success.”
Ewan MacKinnon, Partner at Maven Capital Partners, said:
“Over the last decade, VCTs have become an increasingly mainstream investment and tax-planning option. Despite changes to VCT regulations early in that period, designed to ensure that VCTs focus on early-stage companies, the erosion of pension tax reliefs as well as changes in the tax treatment of dividend and rental income, have seen VCTs become increasingly popular among investors and advisers as an attractive tax-efficient supplement to portfolios.
“The £429m raised across the VCTmarket in the 2014/15 tax year was more than doubled to over £1bn in each of 2021/22 and 2022/23*, while some of the best-performing VCTs have seen annualised returns of more than 10% over the last ten years, compared with 6.5% for the FTSE 100 over the same period.
“The focus on early-stage businesses gives investors the chance to participate in the growth of the brightest emerging British companies and to support job creation and UK economic growth. With VCTs typically targeting innovative companies, particularly in high-growth sectors such as healthcare, cleantech and deep-tech, their success is aligned with Government priorities such as sustainability and health-tech and will help drive the UK’s attractiveness as a hub for innovation.
“The recent extension of the sunset clause, ensuring that VCTs will continue to support emerging businesses and offer investors generous tax benefits until at least 2035, demonstrates the Government’s positive view of VCTs as a vehicle for economic growth, and we expect VCTs will continue to remain an excellent tax-efficient investment option.”
Sharing her insight on how VCTs have evolved over the past decade, Diana French, Retail Strategy Director, Triple Point, said:
“Over the past decade, tax-efficient investments like Venture Capital Trusts (VCTs) have played a crucial role in directing capital toward ambitious UK businesses that drive innovation, employment, and long-term growth. The government’s decision to extend the VCT sunset clause to 2035 reinforces its commitment to supporting early-stage companies while maintaining valuable tax incentives for investors.
“Beyond the potential for attractive returns, investing in these companies delivers tangible economic benefits. VCT-backed businesses contribute significantly to job creation and revenue growth, strengthening the UK’s innovation ecosystem. For example, companies backed by our Triple Point Venture VCT portfolio have created 2,200 jobs as of June 2024, while total portfolio company revenues have grown from £4.2m in 2019 to £145m in 2024. This demonstrates the powerful role VCTs play in scaling high-growth businesses.
“In light of reduced dividend allowances and evolving pension rules, VCTs are emerging as an increasingly attractive tax-efficient solution, offering both tax-free income and growth opportunities as part of a diversified strategy in today’s complex fiscal landscape.”
A bright future lies ahead
It’s clear that the extension of the ‘sunset clause’ has paved the way for a promising future. As regulatory pressures mount on other tax-efficient vehicles like pensions, advisers are increasingly turning to VCTs, EIS, and SEIS to unlock valuable opportunities for their clients. These schemes not only offer compelling tax benefits but also enable investors to support the growth of innovative UK businesses — fuelling the economy while building long-term wealth.
With rising awareness and broader adoption, the next decade holds immense potential for tax-efficient investments to become an even more vital component of holistic financial planning. As new market trends emerge and legislative landscapes evolve, advisers who stay ahead of the curve will be best placed to guide their clients toward success.
