Autumn Budget 2025: More companies eligible for EIS and EMI
The Chancellor’s long-awaited Autumn Budget got off to an ignominious start with the OBR report being leaked minutes before. It was the final pre-Budget faux pas in a series of rumours and apparent about-turns.
The OBR leak meant we knew, before Rachel Reeves was on her feet, that income tax thresholds are to be frozen at their current level until 2028. It was a particularly complex Budget. Here, we focus on the changes to Enterprise Management Incentives (EIS) and the Enterprise Management Incentive (EMI) and the business community will welcome.
EIS
An EIS is a government venture capital scheme encouraging tax-efficient investment in small fledgling companies that qualify.
Under existing rules, there is a £15m cap on a company’s gross assets immediately before the issue of the shares or securities (£16m immediately after issue). A company can raise up to £5m in annual investment (£10m for knowledge-intensive companies); with a £12m limit on lifetime investment (£20m for knowledge intensive companies).
From 6 April 2026, these limits for companies in receipt of investment under the EIS (or Venture Capital Trust scheme (VCT) will be increased):
• The £15m cap on a company’s gross assets will be increased to £30m immediately before issue of the shares/securities; and £35m immediately following issue
• The annual investment limit is raised to £10m (£20m for knowledge intensive companies)
• The lifetime investment limit will be increased to £24m (£40m for knowledge-intensive companies)
• VCT tax relief for individual investors will also be cut from 30% to 20%
EMI
An EMI is a scheme in which eligible companies can offer employees share options up to the value of £250,000 in a 3-year period.
To be entitled to EMIs, the employee must work for the company for at least 25 hours a week or 75% of their total working time. If they purchase the shares for at least their market value at the point the options were granted, no income tax or NI is payable.
Under existing rules, a company can only offer EMIs if it has assets of up to £30m and fewer than 250 full-time employees. A company can grant options over shares up to £3m in total across all employees participating in EMIs.
The Chancellor announced a significant expansion of schemes from 6 April 2026 to include many more eligible companies. From 6 April 2026:
• The £30m cap on a company’s gross assets will be increased to £120m
• The limit to the number of employees will be increased to 500 employees and
• Company options will be increased from £3m to £6m
• For eligible companies, the limit on the exercise period will be extended to 15 years in respect of EMI contracts granted on or after 6 April 2026 (it can also apply retrospectively to existing, unexpired EMI contracts that have not been exercised)
For expert advice on how you can take advantage of the expansion of these schemes, get in touch with the specialist tax solicitors at NGM Tax.
If you would like us to cover an issue in the next NGM Tax Law Newsletter, we would be pleased to hear from you