Entity Setup
Setting Up an Entity: Impact of UK’s Enhanced Investment Reliefs for Start-ups
New rules expand UK's EMI, EIS, VCT reliefs—tech, life sciences & growth-stage companies can now attract more talent and investment.
By NomadicTax Research Team • 5-8 min read • June 14, 2026
## What’s New for Investment Reliefs in the UK
- From **6 April 2026**, the UK has substantially expanded reliefs under **Enterprise Management Incentives (EMI)**, **Enterprise Investment Scheme (EIS)**, and **Venture Capital Trusts (VCTs)**. ([gov.uk](https://www.gov.uk/government/news/britains-innovators-backed-with-around-100m-of-new-investment?utm_source=openai))
- **EMI enhancements**:
* Gross assets test raised from **£30 million to £120 million**
* Employee limit and company share option limit both **doubled** (employees: from 250 to 500; value: from £3 million to £6 million) ([gov.uk](https://www.gov.uk/government/news/britains-innovators-backed-with-around-100m-of-new-investment?utm_source=openai))
- **EIS & VCT changes**:
* Lifetime company investment limits up to **£24 million**; annual limits raised to **£10 million** per company. Gross assets test increased, enabling more scale-ups to qualify. ([gov.uk](https://www.gov.uk/government/news/britains-innovators-backed-with-around-100m-of-new-investment?utm_source=openai))
- Also, **UK Listing Relief** introduced: for companies listing in the UK, there's a three-year exemption from Stamp Duty Reserve Tax. Aimed at helping companies go public domestically. ([gov.uk](https://www.gov.uk/government/news/britains-innovators-backed-with-around-100m-of-new-investment?utm_source=openai))
## Why It Matters for Entity Setup & Growth
- These changes make UK entities more attractive for investors—companies scaling up (especially in tech, biotech, AI) can offer incentives to employees with EMI, attract external capital via EIS/VCT.
- Helps in retaining talent through share-options with favorable tax treatment. Lower risk of losing top employees to startups in other jurisdictions with generous stock option regimes.
## Example: Tech Scale-up Starting in 2026
| Situation | Before April 2026 | After April 2026 |
|---|---|---|
| A startup with £50 million in assets wanting to issue EMI options to 300 staff | Failed gross assets test; limited to 250 employees under old rules | Now qualifies: assets test passed; options to 500 employees; higher limit for value per employee |
| Investor looking to invest £5 million annually in a scale-up | Annual EIS limit lower; company may exceed gross asset cap | Post-changes, company qualifies; investor gets relief; company benefits from broader asset base |
## Action Steps for Founders & Investors
1. **Review your company's current status**: asset base, employee count, option grants—check whether you're now eligible under expanded rules.
2. **Optimize eligible entities**: high growth sectors especially stand to gain; aligning offerings and contracts accordingly.
3. **Design share option plans using EMI**: make sure plans are compliant and documented correctly. Previously disqualified under low thresholds—now open to more companies.
4. **Understand EIS/VCT limits**: Lifetime and annual limits—structure your funding rounds to make best use of reliefs.
5. **List in UK when appropriate**: if IPO is in sight, UK Listing Relief may reduce upfront tax costs.
## Considerations & Potential Risks
- **Compliance and documentation**: Revenue authorities scrutinize option plans; ensure all valuation, HMRC notices and employee documentation are in order.
- **Eligibility criteria differences**: Sectors matter. Knowledge-intensive entities may benefit more, but non-KI sectors need careful planning.
- **Trading rules & start dates**: Must ensure companies meet trading duration requirements to qualify for EIS/VCT.
- **Unintended consequences**: More companies using EMI/EIS may reduce the distinctness of value; overhang on tax reliefs’ cost to treasury may result in future restrictions.
**Conclusion:** The UK’s enhanced investment reliefs strengthen the business case for forming and growing entities domestically. Founders, boards, and investors should move fast to incorporate these benefits into entity structure, raise capital, and reward teams under favorable tax regimes.