For experienced investors, Enterprise Investment Schemes (EIS), Venture Capital Trusts (VCT), and Business Relief (BR) offer a powerful way to support the UK economy while accessing attractive tax advantages. 

These specialist vehicles aren’t for everyone, but in the right circumstances, they can play a vital role in a diversified, tax-efficient portfolio. 

What Are They? 

EIS (Enterprise Investment Scheme) 
Launched in 1994, EIS is designed to help small, higher-risk UK companies raise finance by offering tax reliefs to investors who buy new shares. 

VCT (Venture Capital Trust) 
Introduced in 1995, VCTs are publicly listed investment companies that invest in a diversified portfolio of early-stage businesses. They offer tax reliefs in return for backing innovation and job creation. 

Business Relief (BR) 
Originally introduced in 1976 as part of inheritance tax planning (then called Business Property Relief), BR allows certain business assets to be passed on free from inheritance tax, provided they’ve been held for at least two years. 

Why They Exist 

These schemes exist to support the UK’s small business sector, which drives innovation, employment, and regional growth. In return for the risks involved, the government offers significant tax incentives: 

  • Encourage capital to flow into early-stage companies. 

  • Reward patient investors with upfront and ongoing tax relief. 

  • Promote private funding for sectors underserved by traditional finance. 

Key Features 

Feature 

EIS 

VCT 

Business Relief 

Income Tax Relief 

30% (on up to £1m/year; £2m for KICs) 

30% (on up to £200k/year) 

*20% from April 2026

None upfront, applies at death 

Capital Gains Tax 

Deferred or exempt (after 3 years) 

Tax-free on disposal (after 5 years) 

Exempt from IHT after 2 years 

Holding Period 

3 years minimum 

5 years minimum 

2 years minimum 

Liquidity 

Low (unlisted shares) 

Moderate (listed shares) 

Low (private company shares) 

Risk Level 

High 

Medium to high 

Medium to high 

Hamilton View 

We use these products selectively, where appropriate for the client’s goals, risk profile, and tax position: 

  • EIS: We favour EIS for clients seeking capital growth and CGT deferral or income tax relief, particularly those with lump sums from asset sales. 

  • VCT: VCTs offer a useful source of tax-free dividends for high earners and retirees, often with a more diversified portfolio than single EIS investments. 

  • BR: We incorporate BR-qualifying assets in estate plans for clients with potential inheritance tax exposure, especially when trusts or gifts aren’t suitable. 

Due diligence, manager selection, and diversification are crucial, given the underlying risk and illiquidity of these vehicles. 

Who Are They For? 

These vehicles are best suited to: 

  • High earners looking to reduce income tax or CGT. 

  • Entrepreneurs planning a business exit and seeking CGT deferral. 

  • Older investors addressing inheritance tax liabilities. 

  • Clients with a long-term outlook and appetite for higher risk. 

We assess suitability on a case-by-case basis, ensuring alignment with cashflow needs, risk tolerance, and broader planning objectives. With potential changes to IHT we can see these products being of use to a wider range of clients in the future.  

Hamilton Summary 

EIS, VCT, and Business Relief offer unique opportunities to invest with purpose while managing tax exposure. They are specialist tools not core holdings and should be treated with caution, care, and professional guidance. 

For clients with complex financial needs, these vehicles can unlock powerful tax planning benefits and access to exciting sectors of the UK economy. We are here to guide clients through selection, suitability, and ongoing review to ensure these investments continue to support their long-term objectives.