Entity Setup
Entity Setup: Leveraging New Reliefs for Scale-ups under EMI, EIS & VCT
From April 2026, UK scale-ups gain expanded eligibility under EMI, EIS, and VCT schemes—key changes for businesses looking to attract funding and reward employees.
By NomadicTax Research Team • 5-8 min read • June 12, 2026
## Key Scheme Changes for Growth Companies
The UK government has expanded investment-incentive options as part of its entrepreneurship relief package effective **6 April 2026**. Key changes include:
- **Expanded Enterprise Management Incentives (EMI)**: gross assets test quadrupled (from £30 million to £120 million), employee and share option caps doubled (from 250 to 500 employees; £3 million to £6 million share-option limit). ([gov.uk](https://www.gov.uk/government/news/britains-innovators-backed-with-around-100m-of-new-investment?utm_source=openai))
- **Enterprise Investment Scheme (EIS) & Venture Capital Trusts (VCT)**: lifetime company investment limits doubled to £24 million; annual limits increased to £10 million per company. Income Tax relief rates for VCT investment reduced from 30% to 20% to better balance risk-reward. ([gov.uk](https://www.gov.uk/government/news/britains-innovators-backed-with-around-100m-of-new-investment?utm_source=openai))
## Why These Matter When Setting Up an Entity
These reforms offer strategic advantages for companies and founders when establishing or scaling up entities within the UK:
- **Talent Attraction & Retention**: generous stock options via EMI incentivise employees. If your entity meets the new thresholds, large startups can offer tax-advantaged equity.
- **Capital Raising**: larger EIS / VCT limits mean entities can attract more investment in early growth stages without losing UK tax reliefs.
- **Relief Trade-offs**: VCT relief falling from 30% to 20% means investors may rebalance portfolio expectations—entities must demonstrate higher potential returns to justify investor risk.
## Real-World Example
Imagine a biotech startup plans to recruit globally and raise rounds of funding using EIS/VCT:
- Under old EMI, company exceeded £30 million asset threshold and couldn’t offer EMI options—but now with £120 million limit, it can.
- Attracting a senior hire becomes easier when you offer EMI options worth up to £250,000 per employee.
- Allowing more external investment under EIS/VCT: you can raise up to £10 million annually while still qualifying for investor reliefs.
## Practical Steps to Set Up Entities Optimally
- **Corporate Structure**: ensure share classes and articles support investor-friendly terms; understand what counts as “gross assets” and “dividends/loans” for relief eligibility.
- **Valuation & Timing**: plan your growth so that when you cross new thresholds, you don’t lose past-eligibility. If assets are near threshold, consider timing of capital expenditure or share-issues.
- **Investors’ Perspective**: with lower VCT relief rates, provide compelling financials; consider combining EIS and VCT reliefs.
- **Compliance Matters**: keep accurate records of qualifying assets, ensure you meet the “knowledge-intensive” criteria if applicable. Seek EMI/EIS advanced assurance from HMRC early.
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Setting up your company to align with EMI, EIS, and VCT criteria is now more accessible for scale-ups. Being proactive can make the difference in securing funding and rewarding employees in a tax-efficient manner.