Key Takeaways

• In the UK’s Budget, the Chancellor announced tax changes to support scale‑ups, including significant expansion of key reliefs for growing companies to help them more easily retain talent and attract investment.
• Eligibility for Enterprise Management Incentives options, the Enterprise Investment Scheme and Venture Capital Trusts will widen although upfront income tax relief for Venture Capital Trust investors is being reduced by 10 percent, from 30 percent to 20 percent.
• These reforms will (we hope) not be the final development for positive measures for UK entrepreneurs; HM Treasury launched a Call for Evidence seeking stakeholder views on improving UK tax incentives to better support founders, start-ups, and scale-ups.

On November 26, 2025, the Chancellor of the Exchequer, Rachel Reeves MP, delivered the UK’s Budget (Budget), setting out support for entrepreneurs in the UK and explicitly stating that “our start-up founders drive growth, create jobs, and push the boundaries of innovation.” An Entrepreneurship Prospectus¹ has been published that lays out the strategy of the UK Government (Government) for supporting founders. The Government’s stated goal is to back these companies “to start, scale and stay in the UK” as an important cornerstone for creating a growth economy.

More concretely, the Chancellor announced significant changes to existing tax reliefs to support scale-up companies. These are designed to help those companies to attract talent through competitive remuneration packages and to incentivize greater investment. A new, time-limited, exemption from stamp duty reserve tax was also announced to encourage larger companies to stay and list in the UK.

Although focused on UK companies, some of the changes announced will also help U.S. companies operating in the UK to offer competitive and tax efficient benefits to their UK employees as the race for talent continues.

Enterprise Management Incentives (EMI) Options

EMI options are a form of tax approved discretionary options offering beneficial capital gains tax treatment on option gains for UK tax resident employees. Originally established to help smaller, high-growth companies recruit and retain key employees, a company must meet certain qualifying criteria in order to grant EMI options. It was confirmed in the Budget that the scope of EMI will be extended, giving qualifying companies the ability to continue to grant EMI options as they grow instead of having to move to other less tax efficient or more complex forms of equity incentive arrangements.

One of the limiting factors in granting EMI options is that a company (or group where applicable) must have gross assets of less than £30 million at the time the option is granted in order for the option to be a qualifying EMI option. It was announced that this limit will be quadrupled to gross assets not exceeding £120 million as from April 2026. Additionally, the limit as to the number of employees that a company (or group) may have in order to be a qualifying EMI option will be doubled from 250 to 500 employees, and the company limit on the total value of shares which can be granted pursuant to EMI options will also be doubled from £3 million to £6 million. The maximum period during which option holders will be able to exercise their EMI options and benefit from the tax favorable treatment will also be increased from 10 years to 15 years.

Another very welcome announcement is that from April 2027 the requirement to notify HM Revenue & Customs of the grant of each EMI option—previously necessary for EMI tax treatment—will be abolished.

Enterprise Investment Scheme (EIS) / Venture Capital Trusts (VCT)

The Government has at last acknowledged that, while the Seed Enterprise Investment Scheme (SEIS), EIS, and VCT relief have been successful in encouraging investment in early-stage, higher risk companies, they have not supported the most successful scaling growth companies raising investment because those businesses will typically have outgrown the eligibility limits to qualify for SEIS, EIS, or VCT relief.

Currently, companies cease to qualify for EIS or VCT if the gross assets exceed £15 million immediately before the share issue or £16 million immediately after the share issue. There are also annual and lifetime investment limits on the amounts companies can raise under EIS, VCT, and certain other relief schemes before ceasing to be eligible for EIS and VCT.

The Budget included an announcement that, from April 2026, these thresholds will mostly be doubled, as shown below.

	Current rate	New limit from April 2026
Annual company investment limit	£5 million (£10 million for knowledge intensive companies)	£10 million (£20 million for knowledge intensive companies)
Lifetime company limit	£12 million (£20 million for knowledge intensive companies)	£24 million (£40 million for knowledge intensive companies)
Gross assets tests	£15 million before share issue £16 million after share issue	£30 million before share issue £35 million after share issue

These measures will significantly expand the eligibility for EIS and VCT and represent an advancement in tax system support for UK entrepreneurs.

Scaling companies looking to raise financing now, which are currently too big to qualify for EIS or VCT but would do so under the new limits, ought to carefully assess the advantages and disadvantages to them of delaying any proposed financing until the new limits have come into force.

Unfortunately, it is not all positive change for VCT relief. The upfront income tax relief that can be claimed by individuals investing in VCTs will be reduced from 30 percent to 20 percent. This is described as being “to better balance the amount of upfront tax relief offered compared to EIS, where dividend relief isn’t available.” This proposed change will, of course, not assist the scale-up companies the Government aims to support if it results in a decline in UK individuals’ investments in VCTs, thereby reducing the capital those VCTs have available to deploy.

New UK Listing Relief

Another measure designed to encourage larger companies to stay in the UK concerns stamp duty reserve tax. Transfers of shares in UK companies listed on the main market of the London Stock Exchange are ordinarily subject to a 0.5 percent stamp duty reserve tax charge. From November 27, 2025, a new exemption, UK Listing Relief, will apply to companies listed after that date, exempting transfers of their shares from the 0.5 percent stamp duty reserve tax charge for the first three years of their UK listing.

The Treasury anticipates this new exemption “will enable newly listed companies to secure higher share prices, boost trading volumes and improve their access to capital.” While this might be the case initially, companies attracted to a new listing on the main market of the LSE will need to give careful thought to what they expect the implications to be after the three-year period expires.

Tax Support for Entrepreneurs: Call for Evidence

These reforms may not be the final development, and further positive measures may come for UK entrepreneurs. The Treasury launched a Call for Evidence² inviting entrepreneurs, founders, and any other interested parties, to submit views on how tax incentives and the broader tax system can be improved to better support founders, start‑ups and scale‑ups. The Treasury’s stated aim is to optimize the UK’s tax system to help unlock the UK’s scale-up potential and better support these companies to start, scale, and stay in the UK. The Call for Evidence is open until February 28, 2026.

For more information about the implications of the changes to EMI options, please contact Fleur Benns in Wilson Sonsini’s London Employee Benefits and Compensation practice. For more information about the implications of any of the other changes mentioned in this alert, please contact Emma Game in Wilson Sonsini’s London Tax practice.

---

[1] https://www.gov.uk/government/publications/entrepreneurship-in-the-uk.

[2] https://www.gov.uk/government/calls-for-evidence/tax-support-for-entrepreneurs-call-for-evidence.