Tax Planning
Startup Reliefs Expanded: How Entrepreneurs Can Leverage New Investment Incentives
From 6 April 2026, UK startups have more generous conditions under EMI, EIS and VCTs. Here’s how to use them to keep talent and raise capital efficiently.
By NomadicTax Research Team • 5-8 min read • May 4, 2026
## Recent Policy Update
On **6 April 2026**, a suite of tax reliefs was expanded to better support **entrepreneurs, start-ups and scale-ups**. This unlocks an additional **£100 million per year** in investment incentives, expanding key schemes including **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))
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## What’s New with EMI, EIS, VCT
**EMI (Enterprise Management Incentives):**
* Increased eligibility thresholds: companies with **gross assets up to £120 million** (up from £30 million), and up to **500 employees** (up from fewer than 250) can now qualify. ([gov.uk](https://www.gov.uk/guidance/employment-related-securities-bulletin-64-february-2026?utm_source=openai))
* Increased option limits: companies may now issue **up to £6 million in options**, doubled from £3 million. ([gov.uk](https://www.gov.uk/guidance/employment-related-securities-bulletin-64-february-2026?utm_source=openai))
**EIS and VCTs:** some reliefs have doubled or improved to encourage investment flows into innovative businesses. These include faster relief claims, broader eligibility, and more favourable carry-forward provisions. ([gov.uk](https://www.gov.uk/government/news/britains-innovators-backed-with-around-100m-of-new-investment?utm_source=openai))
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## Why Entrepreneurs Should Care
- Access to **talent retention tools**: Offering options via EMI is more powerful when your company meets the new thresholds.
- Enhanced **capital-raising potential**: Investors in EIS and VCTs can now invest in a larger set of qualifying businesses, boosting capital flow.
- Strategic alignment: These reliefs can make your business more tax efficient overall.
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## How to Use These Changes Effectively
1. **Evaluate if your company meets new thresholds** — check your gross assets, employee count, and business type.
2. **Plan your share-option structure** under EMI carefully — with a share option pool, vesting conditions, and exercise price that reflects growth projections.
3. **Engage investors early using EIS/VCT reliefs** — ensure investments are structured to qualify.
4. **Keep excellent records** — capturing option grants, vesting schedules, share valuations, and compliance with reporting obligations.
5. **Seek specialist tax advice** when needed — especially for share-based taxation and investor-related reliefs.
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## Practical Example
*Start-up “BrightTech Ltd” has 350 employees and £100 million assets. Under the previous EMI rules BrightTech was ineligible. From 6 April 2026, it now qualifies for EMI schemes. Founders can grant employees options up to £6 million together, improving retention and aligning growth.*
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## Watch-outs & Risks
- **Valuation risk**: HMRC scrutiny on what constitutes fair market value at grant.
- **Dilution** for founders if too many options issued.
- **EIS/VCT deadlines and rules** are strict—missteps can revoke relief or penalty exposure.
**Action plan**: check thresholds, redesign your option scheme, consult investor deals for EIS/VCT compatibility, and audit your internal compliance processes regularly.