The UK’s entrepreneurship tax landscape is set to change from April 2026, following Chancellor Rachel Reeves’ Autumn Budget 2025 announcements and proposed reforms aimed at addressing one of the economy’s most persistent challenges: the scale-up gap.
While early-stage startups benefit from strong support, growing businesses have long faced difficulties accessing the capital and talent needed to progress further. These reforms are intended to address that imbalance and create a more supportive environment for scaling companies.
In this article, we break down the proposed changes, what they mean in practice and where it may be worth reassessing your current position.
Key tax relief changes for scaling businesses
The proposed 2026 reforms introduce changes across three key areas: employee share incentives, investment schemes and broader support for scaling businesses. Together, these updates are designed to improve access to both talent and capital at later stages of growth.
Expanded access to EMI for growing companies
One of the most significant developments is the expansion of the Enterprise Management Incentives (EMI) scheme.
Historically, EMI has been one of the most effective tools for attracting and retaining talent, but many businesses lost access as they scaled. Once companies exceeded certain thresholds, they were often required to move to less favourable alternatives such as the Company Share Option Plan (CSOP) or unapproved share arrangements.
From April 2026, the government intends to increase those limits substantially:
- The employee headcount limit has increased from 250 to 500
- The gross assets threshold has increased from £30 million to £120 million
- The total value of shares under EMI options from £3 million to £6 million
- The individual employee limit remains unchanged at £250,000
In addition, the maximum period for holding EMI options before exercise is expected to increase from 10 to 15 years, with the potential for existing options to benefit where scheme documentation is updated accordingly.
The EMI reforms are intended to help scale-up businesses continue using tax-advantaged equity incentives beyond the early growth stage, particularly where competition for senior talent is increasing.
These changes would allow scaling businesses to retain access to EMI much later in their growth journey, rather than losing a key incentive tool at a critical stage.
Higher investment limits and changing investor incentives
Alongside changes to equity incentives, the government has increased the amount of tax-advantaged capital available through the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) schemes.
Key proposed updates include:
- The annual company investment limit has increased from £5 million to £10 million, with up to £20 million available for knowledge-intensive companies
- The lifetime investment limit has increased from £12 million to £24 million, rising to £40 million for knowledge-intensive companies
- Gross asset thresholds are increasing from £15 million to £30 million before investment and from £16 million to £35 million after investment, allowing larger businesses to remain eligible for EIS and VCT funding. At the same time, income tax relief for VCT investors is expected to reduce from 30% to 20%.
While the overall pool of capital available to scaling businesses may increase, these changes also reflect a broader policy shift in how tax incentives are targeted across early-stage and growth investment schemes.
Wider support across the scaling ecosystem
Beyond individual schemes, the reforms also introduce measures aimed at strengthening the broader environment for scaling businesses.
This includes UK Listing Relief, introduced from November 2025, which provides a temporary three-year exemption from Stamp Duty Reserve Tax (SDRT) on transfers of securities in newly listed UK companies, as well as expanded capacity for the British Business Bank to support growth-stage investment.
There have also been adjustments to Capital Gains Tax reliefs, including a reduction in the relief available on disposals to Employee Ownership Trusts. While not directly targeted at scaling incentives, these changes form part of a wider rebalancing of how tax reliefs are applied across different stages of business growth.
What these changes mean for scaling businesses
The practical impact of these reforms is not just broader eligibility, but a shift in where constraints typically appear as businesses grow.
Talent: Equity can now keep pace with hiring
For many businesses, the issue was not awareness of EMI, but losing access to it mid-growth, at exactly the point where competition for experienced hires was intensifying.
The proposed expansion would allow businesses to maintain a consistent equity proposition over a longer period of growth. This becomes particularly relevant when hiring into senior and leadership roles, where equity is often a core part of the overall package.
Fundraising: Structure driven by the business, not the scheme
Previously, businesses approaching the £12 million lifetime EIS cap were often raising less than they needed or structuring rounds around scheme limits rather than commercial priorities.
Under the proposed reforms, the increase to a £24 million lifetime limit, alongside higher annual thresholds, would give businesses greater flexibility to structure funding around growth plans rather than tax constraints.
Timing: A window that requires action
These reforms create a window, rather than a permanent shift. Businesses that review their structures early, while valuations may still be lower and before further growth introduces new constraints, are typically better positioned than those that act later.
The same applies to existing option holders. The proposed extension of the EMI exercise window provides additional flexibility, but it does not apply automatically and requires changes to be made in practice.
How Rise Accounting can help
The 2026 reforms can raise practical questions around incentives, fundraising and timing, while the answers rarely sit in isolation.
At Rise Accounting, we work closely with founders and finance leaders to help navigate these areas in a practical way, including:
- Reviewing EMI eligibility and scheme design
- Advising on share option structures and valuations
- Preparing SEIS and EIS Advance Assurance applications
- Aligning equity planning with upcoming funding rounds
If you have been thinking about any of these points or would like to talk through how these changes may apply to your business, you can book a free consultation with our team —we would be happy to help.
