In a boost to entrepreneurs, startups and scale-ups, a package to unlock private investment and double tax reliefs has been brought into force by the government.
The changes implemented to coincide with the start of the new tax year expand the number of companies eligible for the enterprise management incentives (EMI) scheme, helping companies to attract and reward talent. The EMI is a tax advantaged share scheme that allows eligible companies to offer their employees options to acquire tax-advantaged shares.
The package also includes doubling the amount a company can raise through the enterprise investment scheme (EIS) and venture capital trusts (VCT) to boost investment through additional tax relief through these schemes.
EIS and VCT provide a range of tax reliefs for investors to encourage investment in higher-risk, early-stage companies.
Chancellor Rachel Reeves introduced the package for entrepreneurs at Budget 2025, claiming these changes could support around £100m of additional investment a year.
“I am backing business with a more active state that’s making big commitments to industry,” says Reeves. “I have taken steps to unlock £100m a year for new investment in the businesses founded by our wealth creators so they can access the finance critical to their success.”
The expansion to EMI will include quadrupling the gross assets test from £30m to £120m while both the employee limit and company share option limit will be doubled from 250 to 500 and £3m to £6m, respectively. This is expected to support around 1,800 of the highest growth scale-up companies.
Income tax relief available for those investing in VCTs will be reduced from 30% to 20%, and the EIS and VCT lifetime company investment limits will double to £24m, and the annual company investment limits will increase to £10m.
“The UK has always been a brilliant place to start a company and today’s reforms are a positive step towards making it just as compelling a place to scale,” says Carolyn Dawson, CEO at Founders Forum Group.
“We’re particularly pleased to see the expansion of the EMI scheme: giving more employees a genuine stake in the companies they’re building is one of the most powerful ways to attract talent and reward the risk-takers who drive British innovation forward.”
The government is also supporting scale-ups to list in the UK via the UK listing relief, a three-year exemption from stamp duty reserve tax for companies listing in the UK. It is hoped this relief will boost the trading volumes and share prices of UK scale-ups that list in the UK.
