What changed
Beginning 6 April 2026, the UK government expanded tax relief thresholds for start-ups and scaling companies:
- EMI (Enterprise Management Incentives): Gross assets cap rises from £30 million to £120 million; employee head count limit doubles from 250 to 500; share option limit increases from £3 million to £6 million.
- EIS (Enterprise Investment Scheme) and VCTs (Venture Capital Trusts): Company investment limits and gross assets test are doubled. However, VCT Income Tax relief is lowered from 30% to 20%. (gov.uk)
Why it matters for founders & investors
These changes make it easier for companies to meet investment thresholds and qualify for relief, thus helping scale-ups and attracting larger rounds. But with lower relief for VCT investors, risk–return trade-offs shift.
Example scenario
Suppose you invest via a VCT: previously put £10,000 in, got £3,000 in tax relief at 30%. After 6 April 2026, relief drops to £2,000 on the same investment. But for growth companies qualifying under new thresholds, more opportunities may balance that. If you use EIS instead, you can still get 30% relief, but figures apply to companies meeting new asset/employee caps. EMI scheme offers better option plans for employees in growth companies thanks to expanded eligibility.
Actionable steps
- Review company eligibility: If you are a founder, check existing share option arrangements and ensure they meet new thresholds.
- Adjust investment strategy: VCT vs EIS comparison becomes more important; the lower VCT relief may push more investors towards EIS unless VCT dividends or liquidity justify the risk.
- Tax forecasting: Model expected returns under both schemes with new relief rates and limits; ensure investors and founders understand gross asset implications.
- Compliance readiness: Ensure companies maintain accurate records to meet the gross asset tests and employee counts; penalties or disqualification can result from mis-reporting.
Key takeaways
- Investors should reassess schemes: EIS retains appealing upfront relief; VCT still has value but less so.
- Founders of scaling companies benefit from looser criteria under EMI/EIS/VCT, unlocking recruiting and funding potential.
- Early awareness and planning by both companies and investors can make the revised tax support work effectively.