The Seed Enterprise Investment Scheme (SEIS) has emerged as a winner from changes to investment schemes designed to incentivise investment in early-stage start-ups, with the amount companies raised through SEIS rising 14% in 2024/25.
Venture Capital Trusts raised £881 million through new share issues in 2024/25, a slight rise on the £872 million secured the previous year. Fundraising through VCTs has now more than doubled since 2009/10.
The number of VCT investors claiming income tax relief fell 8% over the year to 22,430, though they claimed relief on £825 million of investment.
The Enterprise Investment Scheme (EIS) saw 3,735 companies raise almost £1.6 billion in 2024/25, while 2,430 companies raised £276 million under the Seed Enterprise Investment Scheme.
A total of 33,220 investors claimed income tax relief on EIS investments over the year, with a further 11,200 claiming relief under the SEIS.
SEIS is designed to support the UK’s earliest companies, providing investors 50% income tax relief on the money they invest, among other benefits, to reflect the inherent risk of investing in early stage firms.
“The 2024/25 tax year was a relatively strong year for venture capital fundraising, but Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EIS) suffered to some extent from higher interest rates on offer elsewhere and a decline from the post-pandemic peak of interest,” said Sarah Coles, head of personal finance at AJ Bell.
“Higher limits introduced for Seed Enterprise Investment Schemes (SEIS) also diverted some money from EISs to SEISs.
“VCTs, EISs and SEISs aren’t right for every investor, so before you take the plunge you need to appreciate the nature of the investment and the level of risk involved. In the case of VCTs, with some investment platforms this could mean completing a test to ensure you understand what you’re getting into. In the case of EISs or SEISs, investing may involve going through specialist venture capital platforms.
“It’s also vital not to jump into anything purely for the tax breaks. The tax treatment is a generous bonus, but should never be your reason for investing.”