What Are EMI, EIS & VCT? A Quick Refresher
- EMI (Enterprise Management Incentives): Share option scheme allowing companies to grant options with favorable tax treatment to employees.
- EIS (Enterprise Investment Scheme) and VCTs (Venture Capital Trusts): Encourage private investment by offering upfront tax relief, CGT-free gains, loss relief, etc.
What’s Changing from April 2026?
From April 2026, new more generous limits will apply: EMI eligibility thresholds, company size, and investment caps will increase—these changes are part of a UK government call for evidence to expand support for scaling businesses. (gov.uk)
Key changes proposed include:
- Gross assets test for companies under EMI rising from £30 million to £120 million.
- Employee limit under EMI doubles from 250 to 500.
- Company share option limit under EMI doubles from £3 million to £6 million.
- For EIS & VCT, lifetime company investment limits increasing to £24 million (£40 million for knowledge intensive companies), annual company investment limits to £10 million (£20 million for KICs). Gross assets tests also increase. (gov.uk)
Why These Changes Matter for Founders & Investors
- Enables larger startups to use EMI without restructuring—for example tech firms scaling rapidly can offer share options more widely.
- Investors in scaling companies get more opportunity to use EIS or VCT schemes.
- Raises potential funding per company; attracts more international capital and skilled employees.
Examples: Real-World Impacts
- A software scale-up with £80 million in assets will become EMI-eligible under the new gross assets test.
- Investors pumping in £12 million in a knowledge-intensive company may now get full EIS relief, where previously limits were binding.
Structuring Tips for Startups Setting Up Now
- Review your current cap table, valuation, asset base—project where you will be by April 2026.
- If approaching limits, consider filing EMI options or fundraising rounds before new rules take effect.
- For knowledge-intensive companies (KICs), ensure certification to access enhanced thresholds.
- Liaise with legal and financial experts to ensure compliance with EIS/VCT criteria under new limits.
Risks and Considerations
- Regulations proposed in the “call for evidence” stage—not yet enacted legislation. Final details may differ.
- Monitoring certification and definitions—what constitutes “knowledge intensive” could affect access.
- High asset companies must be attentive to dilution and other tax-planning trade-offs.
Actionable Advice Now
- If you are founding or investing in a startup, model capital needs under both old and proposed thresholds.
- Ensure employee share schemes are compliant and options are issued within these new limits.
- Prepare documentation ahead of April 2026 to avoid delays.
- Keep updated via HMRC and Treasury publications—join stakeholder calls and consult the official “Tax Support for Entrepreneurs: Call for Evidence” document. (gov.uk)
Closing Thoughts: These expanded thresholds present a rare opportunity to scale equity-based incentives. Proper timing and structure will allow founders and investors to reap the most benefit under the new regime.