Major tax changes to support scale-ups – Autumn Budget 2025

There are several tax incentives available for young, innovative companies which have long helped start-ups thrive. However, existing limits, which have not been updated for many years, often restrict the availability of these reliefs to businesses entering the critical growth phase.

In the 2025 Autumn Budget, the government has announced a package of changes designed to address this challenge, with the aim of helping growing companies attract both investment and talent. 

What’s changing?

From 6 April 2026, the Enterprise Management Incentives (EMI) scheme will see its eligibility limits significantly increased. The company cap for EMI options rises from £3 million to £6 million of options, the gross asset limit jumps from £30 million to £120 million, and the employee threshold doubles from 250 to 500. The maximum exercise period will also be extended from 10 years to 15 years, even for existing options. However, we have not seen an increase in the £250k cap per employee.  

For investors, the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) regime are being enhanced, also from April 2026. EIS annual investment limits will double to £10 million (or £20 million for knowledge-intensive businesses), with lifetime limits increasing to £24 million (or £40 million for knowledge-intensive companies). Gross asset thresholds will also rise, enabling more scale-ups to qualify.  

Whilst EIS retains its generous 30% income tax relief on entry, the ability to defer capital gains into the investment, and no capital gains tax on exit, the up-front tax relief on VCT investments will reduce from 30% to 20% to better balance incentives and encourage support for high-growth companies. 

Why does this matter?

Previously, restrictive EMI limits meant companies quickly outgrew eligibility, forcing complex alternatives. These reforms allow scale-ups to continue to offer tax-advantaged share options, helping retain key team members without draining cash flow.  

For investors, enhanced EIS limits and continued relief make follow-on funding more attractive, reducing risk and improving returns. 

Impact on our clients

For many of our clients, these changes provide scope to revisit incentive and funding strategies. Larger EMI thresholds mean you can incentivise senior hires and retain expertise for longer. Increased EIS limits open doors for bigger funding rounds while maintaining investor confidence.

If the Budget has raised any questions for you, or if you would like any further information or guidance on this topic, get in touch with your usual Kreston Reeves contact or contact us here.