I can’t remember a Budget with as much doom-mongering and speculation in the build-up as the one Rachel Reeves delivered two weeks ago.

For months, we were confronted with headlines warning of tax hikes as the Chancellor faced a stern challenge of plugging a “fiscal black hole”. All manner of taxes – capital gains tax, inheritance tax, income tax, new wealth taxes – were all, at one time or another, purported to be in the Chancellor’s sights.

It resulted in a tense and chaotic build-up – and ultimately, it turned out to be for nothing. The Office for Budget Responsibility has since said there was no “black hole”. And the policies and reforms announced were, for the most part, more modest than radical.

It begs the question: why all the noise?

No news can be good news
For all the negativity in the weeks and months leading up to it, the Budget actually delivered some pragmatic, targeted changes.

But there were also some positives in areas where no changes were announced. For instance, leaving R&D tax credits alone was a sensible move from the Chancellor. It seems that the scheme is tinkered with in almost every Budget. So, for the tech sector in particular, no news was good news.

Similarly, there were no changes to the Seed Enterprise Investment Scheme (SEIS), which can be seen as a plus. SEIS is one of the most popular routes for the earliest-stage, pre-product founders to secure capital.

Startups need certainty and stability if they are to plan for the future effectively – and this isn't possible when policy and taxation are constantly changing. The Chancellor was right to avoid the temptation to tinker with R&D and SEIS.

At Haatch, we’ve been involved in many SEIS rounds in recent years; for those startups just at the point of bringing a product to market and generating revenue, we know how important the scheme is for incentivising private investment, making capital available to fast-track their growth.

EIS gets another shot in the arm
If SEIS is important to the prospects of the UK’s most promising startups and scaleups, then the Enterprise Investment Scheme (EIS) is absolutely vital. The data proves this point: between April 2023 and April 2024, 2,290 companies raised a total of £242 million through SEIS. Compare that to the volume of investment under EIS through which, in the same period, 3,780 companies raised a total of £1.58 billion.

Positively, the Chancellor announced that from April 2026, companies will be able to raise up to £10 million annually under EIS, with the lifetime cap lifted to £24 million (or more for knowledge-intensive companies).

For over 30 years now, this scheme has been vital in channelling investment into early-stage companies, and by lifting the amount a company can raise through EIS, the Chancellor will help ensure that the most promising scaleups – those already approaching their EIS cap – can access more capital to support their long-term growth. It was a good move.

But the Budget also threw a curveball at the Venture Capital Trusts (VCT) industry by reducing upfront income-tax relief for VCT investors from 30% to 20%. This is a blow to an industry that, like SEIS and EIS, has long provided a channel for investors to support growing companies by offering tax reliefs and incentives.

Taken together, these two policies (EIS lifetime cap being lifted and VCT income tax relief being cut) can be seen as a structural shift – one that reaffirms EIS as the bedrock of UK venture investing. By increasing company caps and leaving SEIS intact, the government is helping ensure that high-potential, growth-stage companies can secure sufficient funding to scale, while also signalling that tax incentives for early-stage investment remain a national priority.

Now that it’s done, we can all move on with clarity
My reflections on the Budget, then, are somewhat mixed.

The build-up was chaotic – unnecessarily so. The rumour mill went into overdrive as too many policies were being floated by the Chancellor and her team, typically leaked to the media to test the response. It was a haphazard approach that impacted confidence and, in many markets, allowed inertia to creep in as people and businesses had little choice but to sit tight and wait and see what was actually in the Budget.

But when the announcement finally came, there was a modest but meaningful restructuring of the UK’s tax-efficient investment landscape, one which stands to benefit entrepreneurs, investors, and the broader startup ecosystem alike.

With that in mind, and now with the uncertainty of the Budget having dissipated, both startups and the investors backing them can move ahead with greater clarity and confidence. Hopefully, lessons have been learnt by the government about how to manage a build-up to major fiscal statements, but at least the policies unveiled recognised the importance of supporting entrepreneurs and early-stage companies as a means to boost the economy as a whole. 

Also shared with Startups Magazine.