Changes effective from the new tax year expand eligibility for Enterprise Management Incentives and increase investment limits for Enterprise Investment Scheme and Venture Capital Trust support. The government estimates the package could unlock around £100 million of additional investment annually.
Both sides of the founder-finance problem, talent and capital, are addressed through the tax system rather than directly. That is the British approach and it has consequences.
The business thought
EMI can help cash-constrained companies compete for people they could not otherwise pay for. EIS and VCT relief widens the supply of risk capital by improving the investor’s downside.
Both are powerful and both are technical. Valuation, eligibility and documentation mistakes can destroy the benefit they were meant to create, and usually do so silently until someone looks.
The practical watch
Take specialist tax and legal advice before granting options or marketing a relief-led investment. This is not an area to work out from guidance notes.
Explain the underlying business case first. The relief should improve the risk and reward of something worth doing, not substitute for it. An investment that only makes sense because of the tax treatment is not an investment.
Related reading
- The £1bn playbook: how the Good Growth Fund spends, and how to be on the receiving end
- The UK Budget leaned into scale-up finance, procurement and AI adoption
- Scale-up policy focused on direct capital and reducing growth friction
Source: HM Treasury, entrepreneurship tax-relief package.