In November 2025, the government published a call for evidence on how the tax system can better support investment in innovative, high-growth companies. The scope and purpose of the consultation is explained in an earlier article. ICAEW has now responded to the call for evidence in ICAEW Representation 21/26.

Stable tax framework

ICAEW believes that the government can best support entrepreneurship by having a stable tax framework and moving away from blunt tax hikes and tax policies that disproportionately increase the cost base of UK businesses. ICAEW’s position, as set out in the run-up to the Autumn Budget 2025, is that doing business in the UK is too uncertain, too difficult, and too expensive. 

Package of targeted changes 

ICAEW suggests that the government considers:

• making targeted changes to the enterprise investment scheme (EIS) and the seed EIS (SEIS) in order to maintain and enhance their effectiveness. Suggestions include:
• introducing rolling EIS limits (5–10 years) rather than rigid lifetime caps, to reduce cliff edges and better support scale-up funding rounds;
• extending the age limit restriction for EIS companies to support scaling, alongside the enhanced company size thresholds announced at the Autumn Budget 2025;
• simplifying EIS and SEIS legislation administration in order to reduce technical complexity and compliance burdens for early-stage companies; and
• increasing employee limits within EIS;

• strengthening enterprise management incentives (EMI) to support talent attraction, including by:  
• increasing the individual EMI option limit which has been unchanged since 2012, to remain competitive for senior and C-suite recruitment; and 
• relaxing the EMI working time requirement for spin-outs and key individuals working across multiple ventures;  

• reconsidering the reduction in rate of income tax relief from 30% to 20% on venture capital trust (VCT) investment announced at the Autumn Budget 2025; and 

• investing in HMRC helplines and strengthening technical expertise in HMRC’s specialist teams to reduce uncertainty and compliance burdens for innovative businesses.

Encouraging investment

ICAEW views existing tax incentives as deficient in unlocking investment from serial entrepreneurs and family office investors, as outside of EIS, there are few initiatives that meaningfully incentivise investment by this category of investor. Although capital gains tax deferral relief provides some encouragement to reinvest proceeds, ICAEW suggests that an outright exemption would represent a stronger behavioural incentive. Such an approach could more effectively promote the recycling of capital into new ventures. 

Members who contributed to ICAEW’s response also noted that recent changes to inheritance tax and domicile rules have further complicated reinvestment decisions, in some cases encouraging wealth to move offshore.