Autumn budget 2025: a step forward for UK start-ups and scale-ups, but challenges remain

The UK Budget is a welcome step toward strengthening the UK’s innovation ecosystem, with expanded share option schemes, higher investment limits, and regulatory reforms. Yet, while these measures support with attracting talent and funding, delayed implementation and some structural challenges mean there’s still more to do to make the UK a truly competitive hub for growth.

Key measures at a glance

Enterprise management incentives (EMI)

• From April 2026, EMI eligibility will expand significantly, allowing scale-ups (not just start-ups) to offer tax-advantaged share options.
• Employee limit raised to 500, gross assets test to £120m, and option holding period extended to 15 years.
• Companies can also update EMI/CSOP contracts to allow option exercise at PISCES trading events, improving liquidity for employees.

Enterprise investment scheme (EIS) and venture capital trusts (VCT)

• From 6 April 2026, company investment limits increase substantially:
  
  • EIS & VCT annual company limit: £10m (standard), £20m for Knowledge Intensive Companies (KICs).
  • Lifetime company limit: £24m (standard), £40m for KICs.
• Gross assets test: Raised to £30m before share issue and £35m after share issue.
• Investor limits: No change – EIS remains £1m (£2m for KICs), VCT remains £200k per investor.
• Relief changes: VCT Income Tax relief reduces from 30% to 20% (EIS relief remains at 30%).

Other notable measures

• UK Listing Relief: Three-year exemption from Stamp Duty Reserve Tax for newly listed companies (effective 27 Nov 2025).
• Business Asset Disposal Relief (BADR): Confirmed implementation of a previously announced change from 6 April 2026, with the CGT rate for BADR and Investors’ Relief rising from 10% to 18%, aligning with the main lower CGT rate.
• British Business Bank: £25.6bn capacity, with at least £5bn earmarked for growth-stage funds; new VentureLink initiative to help pension funds invest in venture capital.
• Pension reforms: Unlocking £160bn of defined benefit scheme surpluses to channel more capital into UK innovation.
• Regulatory reform: Commitment to cut £5.6bn of administrative burden by end of Parliament.

Commentary: progress with caveats

These measures tackle two critical pain points: talent retention and access to scale-up capital. Expanding EMI eligibility will help high-growth businesses compete for skilled employees, though the delayed start until April 2026 may blunt immediate impact. 

Similarly, higher EIS and VCT limits should unlock more follow-on funding, but without deeper liquidity and more attractive UK listings, later-stage capital may still flow overseas. Pension fund unlocking is promising, but success will hinge on execution.

Want to understand how these changes affect your business? Contact our corporate team for tailored advice on EMI, EIS, and growth funding strategies.