Entity Setup
Unlocking Growth: How UK Startups Benefit from the Expanded EMI, EIS & VCT Reliefs
From April 2026, UK startups get boosts to tax reliefs under EMI, EIS & VCT – here's what changes and how you can use them to attract talent and capital.
By NomadicTax Research Team • 5-8 min read • May 17, 2026
## What are EMI, EIS and VCT?
- **EMI** (Enterprise Management Incentives): tax-advantaged share-option schemes to reward and retain key employees.
- **EIS** (Enterprise Investment Scheme): allows investors to receive tax reliefs for investing in early-stage, high-risk companies.
- **VCT** (Venture Capital Trusts): similar reliefs via funds investing in small UK companies.
## Major Changes from 6 April 2026
| Scheme | Earlier threshold | New threshold / limit from 6 April 2026 | Why this matters |
|---|---|---|---|
| **EMI - company options** | Up to **£3 million** total options value | **£6 million** | Enables more grant capacity to more employees ([gov.uk](https://www.gov.uk/hmrc-internal-manuals/employee-tax-advantaged-share-scheme-user-manual/etassum50500?utm_source=openai)) |
| **EMI - gross assets** | £30 million maximum | **£120 million** | Allows larger companies to use EMI or retain higher-growth asset base ([gov.uk](https://www.gov.uk/hmrc-internal-manuals/employee-tax-advantaged-share-scheme-user-manual/etassum50500?utm_source=openai)) |
| **Number of employees** | Less than 250 | Less than **500** | Supports scaling startups with bigger teams ([gov.uk](https://www.gov.uk/hmrc-internal-manuals/employee-tax-advantaged-share-scheme-user-manual/etassum50500?utm_source=openai)) |
| **Exercise holding period** | 10 years | **15 years** | More flexibility for option holders, better for long-term growth plans ([gov.uk](https://www.gov.uk/hmrc-internal-manuals/employee-tax-advantaged-share-scheme-user-manual/etassum50500?utm_source=openai)) |
## How to Apply These Changes in Practice
- **Review existing option agreements** before they lapse or expire: existing EMI options (not yet exercised or expired) may be **amended**—before exercising—to enjoy the increased 15-year qualifying exercise period. ([gov.uk](https://www.gov.uk/hmrc-internal-manuals/employee-tax-advantaged-share-scheme-user-manual/etassum50500?utm_source=openai))
- **Check your company’s size and status** after 6 April 2026: ensure your gross assets and employee count are within the updated thresholds. If so, EMI usage can expand.
- **Use valuation properly**: when issuing EMI options, apply fair market value; if you're pushing your assets close to new thresholds, valuations will matter.
## Implications & Benefits
- **Attracting and retaining talent**: startups can offer stronger EMI packages because more employees become eligible, and over a longer window they can profit from options.
- **Competitive fundraising**: with enhanced EIS/VCT reliefs, companies can more effectively offer incentives to investors.
- **Strategic planning**: for companies approaching the earlier thresholds, there is now breathing space; but entering those bands means increased compliance and reporting.
## Actionable Steps
1. Audit all your current EMI and EIS eligibility and option agreements. Consider whether amendments are necessary to benefit from the increased limits.
2. If you’ve delayed launching an EMI scheme due to prior limits, now may be the time to proceed.
3. Engage with tax advisers or legal counsel to facilitate option-agreements adjustments, and ensure all documentation complies with HMRC requirements.
4. Communicate changes to employees so they understand potential value under the new rules.
## Example Scenario
**Scenario**: Startup Alpha has 300 employees and gross assets of £40 million. Under old rules, they were excluded from EMI. **Under new rules (post-6 April 2026)**, their new thresholds (employees <500, assets ≤£120 million) make them eligible. They issue options worth £5 million total. The employees receive preferential tax treatment if they exercise options after the 15-year holding period.
**Bottom line**: the 6 April 2026 changes substantially improve incentives for growing businesses and employees alike. Startup founders and investors should assess whether and how to adapt to take full advantage of these relaxed terms.