Entity Setup
Maximizing Entrepreneur Reliefs: EIS, VCT & EMI Changes from April 2026
Investment incentives are being overhauled in the UK: eligibility, thresholds and reliefs for EIS, VCTs and EMI change significantly. Here's how founders, investors, and employees can plan ahead.
By NomadicTax Research Team • 5-8 min read • April 17, 2026
## Overview of the Reform
In a recent call for evidence published by the UK government, several key changes to tax reliefs for *Entrepreneurial Relief Schemes* were set to take effect from **6 April 2026**. These affect three major incentives: the Enterprise Investment Scheme (EIS), Venture Capital Trusts (VCTs), and the Enterprise Management Incentive (EMI). ([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))
## Key Changes at a Glance
| Scheme | What's changing | Effective 6 April 2026 |
|---|---|---|
| **EMI** | Gross assets test rises from £30m → £120m; employee limit doubles (250 → 500); individual grant limit doubles (£3m → £6m) | Allows larger companies & employees in scale-ups to use EMI schemes without disqualifying due to size. ([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)) |
| **EIS & VCT** | Lifetime & annual company investment limits increased; for VCTs, upfront tax relief cut from 30% → 20% | Maintains incentives for high-risk capital but focuses benefits on growth and returns. ([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)) |
| **VCT Relief Rate** | Upfront Income Tax relief for VCTs reduces from **30% to 20%** | Applies from 6 April 2026; aligns VCT relief with risk and cost profile. ([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)) |
## Who Is Affected?
- **Founders or growing companies** aiming for scale. Higher thresholds under EMI mean more employees, higher valuation companies can still offer options.
- **Investors** considering VCTs may see lower upfront tax relief, so returns and dividends matter more.
- **Companies and investors** currently using EIS, VCTs or EMIs should assess whether they need to act before 6 April 2026.
## Practical Planning Advice
- **For founders**: Consider accelerating option grants under EMI before thresholds rise, if you expect the new higher caps to make EMI viable for your team later.
- **For investors in VCTs**: Factor in reduced upfront relief—look at dividend yield, CGT exemption, and long-term upside more carefully.
- **For tax advisors**: Update investment model spreadsheets and cashflow projections to reflect new reliefs. Capture investment decisions before 6 April 2026 where favorable.
- **For HR and finance teams**: Communicate changes to staff—especially regarding EMI eligibility—and make sure offer letters/options reflect the upcoming new limits.
## Example Case Study
**Startup Alpha**, a tech company with 100 employees and assets of £25m, grants £3m worth of share options in EMI. Under current rules, it's eligible. Once the reforms hit, it remains eligible—thanks to the increase in cap. However, **Startup Beta**, with £40m assets, would be disqualified before; under the new rules it could offer EMI to its first 500 employees. On the investment side, **Investor Joe** investing £10,000 in a VCT in May 2026 will have 20% relief instead of 30%; previously the reward was £3,000 in tax relief, now £2,000.
## Risks & Things to Watch
- VCTs: reduced relief may reduce demand—and possibly share premiums/distribution rates.
- Compliance: schemes have tight conditions — failing to meet them means reliefs lost.
- Timing: some companies or investors may rush things, increasing transactional risk or due diligence mistakes.
## Conclusion
These changes—implemented in Budget 2025—mean entrepreneurial reliefs are becoming more tightly focused and scaled up. For those involved in scale-ups, startups, early-stage investors, or ambitious companies, early planning before 6 April 2026 can preserve more benefit. Always consult a tax professional when structuring these investments to ensure reliefs are valid and used optimally.