We asked three financial planning professionals to give us their views on what the Autumn Budget will mean for EIS investment.EIS received a specific mention during the Chancellor’s speech, and the changes to the Scheme are far reaching.  You can read more about the details of what was announced here.

Our experts:

Ewoud Karelse

Head of Tax Advantaged Investments at Tilney

Neil Cole

Director of Wealth Planning Product Development & Management at UBS Wealth Management

Declan McAndrew

Head of Investment Research at Foster Denovo

What will be the key impact of the Autumn Budget for EIS investment?


My key takeaways from the Autumn Budget, with regards to EIS, have been the following:

1)      Now that EIS is firmly in the capital growth camp, the investment risks, including volatility, default and liquidity, have increased significantly for the average EIS investor, who may have grown used to investments that benefited from lower volatility, default and liquidity risks and that were more predictable in outcome.

2)      Financial planners need to appreciate that the timing of reliefs is no longer as straightforward as many growth-focussed EIS fund managers cannot guarantee a particular investment date.

3)      They will also need to appreciate that client appropriateness and suitability assessments need to go well beyond whether their client is a high net worth individual or not, as experience and knowledge will become more important factors in this assessment process.

4)      With more companies failing in clients’ portfolios than previously, ongoing suitability concerns such as whether the client will continue to be an additional rate tax payer to absorb any losses will also need to be addressed.

5)      The higher investment risk will also lead to more diversification of investments.

6)      And more diversification will require financial planners to do more research and increase their knowledge of the investments they recommend to their clients.

7)      Independent research providers will have to help financial planners to better understand the various risks as well as help identify which EIS are operating in the spirit of the new legislation and which are not.



For all the pre-budget speculation in the trade press you could have been forgiven for thinking that the Chancellor has issues with the EIS investment, perhaps seeing the industry as an easy target to balance the books.

The truth that emerged from the budget was broadly supportive of further EIS investment. As ever, the budget speech is the mere headline announcement, how the stated intentions are subsequently implemented being of much greater importance.

Certainly a doubling of the annual EIS allowance for ‘knowledge-intensive’ companies was a pleasant surprise for an industry that had feared allowances and the level of tax relief were under threat. As expected there was also a stated intention to exclude ‘low risk’ investment from qualifying for EIS status. Rather than risk industry disruption by immediately excluding certain sectors or trades, the introduction of the new test ‘to reduce the scope for and redirect low-risk investment’ is potentially a more grown up solution.

As ever, the devil will be in the detail when HMRC provides guidance as to what constitutes a higher risk to capital loss. Another positive from the budget was that EIS received greater media coverage than it does usually – thanks in part to the lack of any pension changes and news on ISAs. This will help to validate it more publically as an invaluable contributor to the long term economic growth of UK plc.

The key impact of the budget, if implemented correctly, should be a refocusing of investment into risk capital in line with the spirit of EIS. Hopefully it will also help increase recognition and understanding of EIS within the financial advisory sector.



My key takeaways:

1)         It was great to see the Chancellor very publicly support EIS as a way of generating growth capital for small business in the UK.

2)         The increase in fundraising limits for knowledge intensive companies (from £5m to £10m per year) shows that Government is keen to support larger investment rounds into these businesses, and help prevent early stage investors from being diluted out in follow-on finance rounds.

3)         The individual investor limit has also doubled to £2m where investments are going into knowledge intensive companies, although I’m not sure this will have much impact given how few people fully utilise their EIS allowance currently.

4)         It’s been clear for some time that the Treasury are keen to see the end of ‘capital preservation’ focused EIS products, and the introduction of a principles based test seems like a sensible way of doing this.  It should hopefully ensure that the industry focuses on supporting the right businesses with proper risk capital as opposed to trying to find loopholes in the legislation.


READ NEXT: Five lessons learned from the latest EIS statistics from HMRC

CALL US: +44 20 8132 6199
6 Snow Hill
Message Us