Entity Setup

Getting Set Up: Entity and Investor Tax Changes for UK Start-Ups from April 2026

Startup founders and investors must adapt to expanded support under EIS/VCT/EMI but also adjust to lower upfront relief for VCTs from April 2026.

By NomadicTax Research Team • 5-8 min read • April 2, 2026

## 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](https://www.gov.uk/government/calls-for-evidence/tax-support-for-entrepreneurs-call-for-evidence/tax-support-for-entrepreneurs-call-for-evidence?utm_source=openai)) ## 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.