The UK government is making significant changes to the Enterprise Management Incentive (EMI) and Enterprise Investment Scheme (EIS), aiming to make these schemes more accessible for scale-ups and larger businesses. Here’s a summary of what’s changing, why it matters, and what you should do next.
What’s New for EMI?
The EMI scheme is getting a major overhaul to help more companies attract and retain talent:
- Employee cap: The maximum number of employees eligible for EMI has doubled from 250 to 500.
- Gross assets threshold: Companies can now qualify with up to £120 million in gross assets, up from £30 million.
- Company share option limit: The cap on company-wide unexercised options has increased from £3 million to £6 million.
- Maximum holding period: The exercise period for EMI options is now 15 years (up from 10), and this extension applies retrospectively to existing options that haven’t expired or been exercised.
- Notification requirement: From April 2027, the need to separately notify EMI options will be removed, reducing admin and aligning EMI with other tax incentive schemes. However, companies must still register their plan with HMRC and submit annual returns.
These changes mean more companies—especially those that previously exceeded the limits—can now use EMI to incentivise and retain employees.
EIS and VCT: Bigger Limits, New Relief Rates
To further boost investment into the UK, the government is also increasing limits for Venture Capital Trusts (VCT) and EIS investments:
- Company investment limit: Now £10 million per year, or £20 million for Knowledge Intensive Companies (KICs).
- Lifetime company investment limit: Increased to £24 million, or £40 million for KICs.
- Gross assets test: The threshold rises to £30 million before share issue and £35 million after, effective April 2026.
- VCT income tax relief: From 6 April 2026, the income tax relief for VCT investments will drop from 30% to 20%. EIS relief remains at 30%.
Higher asset thresholds mean more established scale-ups can access EIS and VCT, but investors should be aware of the reduced VCT relief and plan accordingly.
Side-by-Side: EMI vs EIS Changes
EMI (from 6 April 2026)
| Parameter | Old Limit | New Limit |
|---|---|---|
| Employee headcount limit | 250 | 500 |
| Gross assets threshold | £30m | £120m |
| Company-wide unexercised options | £3m | £6m |
| Individual employee limit | £250,000 | £250,000 (unchanged) |
| Exercise period | 10 years | 15 years |
| Notification requirement | Required | Removed (from Apr 2027) |
EIS (from 6 April 2026)
| Parameter | Old Limit | New Limit |
|---|---|---|
| Annual company investment limit | £5m | £10m |
| Annual limit for KICs | £10m | £20m |
| Lifetime company investment | £12m | £24m |
| Lifetime limit for KICs | £20m | £40m |
| Gross assets test (pre-issue) | £15m | £30m |
| Gross assets test (post-issue) | £16m | £35m |
| Investor income tax relief | 30% (EIS) | 30% (unchanged) |
| VCT income tax relief | 30% | 20% |
Why These Changes Matter
These updates signal a strong government push to support scale-ups and innovation, while balancing investor incentives. Companies should review their share option plans and fundraising strategies ahead of April 2026 to maximise the benefits.
Important Notes
- The increased limits do not apply to companies registered in Northern Ireland or those trading in goods or electricity (including generation, transmission, distribution, supply, wholesale trade, or cross-border exchange). These companies will continue under the existing scheme limits.
- Early planning is key: as the changes come into effect in April 2026, both companies and investors should act now to make the most of the updated regimes.
The information provided in this guide is intended as a general overview to help readers understand the key measures introduced in the UK Budget 2025. It does not claim to be exhaustive and should not be relied upon as a substitute for tailored professional advice. If you have any questions or require specific guidance, please
speak to one of our experts.
