How the UK 2025 Budget Affects EMI, VCT & EIS?

Date: December 8, 2025

The 2025 Budget announced a range of important changes affecting the EMI scheme, Stamp Duty, Venture Capital Trusts (VCTs), the Enterprise Investment Scheme (EIS) and capital allowances.

Business owners, scale-ups, and investors need to understand which measures are already in effect and which remain subject to legislation. Early planning can help optimise tax efficiency and ensure opportunities are not missed.

What Are the Changes to the EMI Scheme?

The EMI scheme will allow more scaleups to offer tax advantaged share options, but these changes are pending approval under the Finance Bill 2025/26.

Proposed Expansion of EMI eligibility

From April 2026, the government plans to expand the EMI scheme to support growing UK businesses. Proposed changes include the following:

Increasing the employee limit to 500
Raising the gross assets test to £120 million
Increasing the maximum value of shares under option to £6 million, and
Extending the option holding period to 15 years, including existing EMI contracts

These reforms aim to help scaleups attract and retain top talent through tax-efficient share incentives.

Businesses should begin reviewing their current EMI arrangements to understand how these changes could benefit them once enacted. It is also proposed that the EMI notification requirement will be removed from April 2027, simplifying compliance and administration. While these updates are highly relevant, they remain subject to parliamentary approval.

Current SDRT Relief for UK Listings

Transfers of securities in newly listed UK companies now benefit from Stamp Duty Reserve Tax relief for three years.

Effective from 27 November 2025, companies listing on a UK regulated market are entitled to relief from the 0.5% Stamp Duty Reserve Tax (SDRT) on transfers of securities for three years. This relief provides a valuable tax saving opportunity for businesses planning a public listing and complements the EMI scheme by allowing flexible allocation of share options without additional tax costs.

Companies considering a UK listing can immediately plan for the three-year SDRT exemption. This measure is already in force and does not require further legislation, making it actionable for businesses and investors.

What are the changes to VCT/EIS?

Increases to VCT and EIS investment limits offer growth opportunities for companies using the EMI scheme, but these are still awaiting parliamentary approval.

Proposed Investment Changes to VCT/EIS

The 2025 Budget proposes raising company investment limits for Venture Capital Trusts (VCTs) and Enterprise Investment Scheme (EIS) companies. Annual company investment limits would rise to £10 million, or £20 million for Knowledge Intensive Companies (KICs), with lifetime limits increasing to £24 million (or £40 million for KICs). Gross assets tests would increase to £30 million before share issue and £35 million after. At the same time, VCT income tax relief will reduce to 20%.

Businesses and investors should monitor these proposals closely. Once enacted, combining EMI share options with EIS or VCT investment could maximise tax-efficient growth capital, but decisions should be timed according to legislative progress.

What are the Proposed changes to Capital Allowances?

First Year Allowances and changes to writing down rates will affect businesses, once legislation is passed.

How Will the 40% FYA Affect Businesses?

From 1 January 2026, a new 40% First Year Allowance (FYA) is planned for qualifying main-rate assets, including leased assets and assets held by unincorporated businesses. At the same time, main rate writing-down allowances for Corporation Tax will reduce from 18% to 14% (1 April 2026) and for Income Tax from 6 April 2026.

While these measures encourage investment in business assets, they remain subject to enactment. Companies should start planning potential capital expenditure and EMI-linked incentives, but wait to confirm timing and eligibility once the Finance Bill 2025 26 becomes law.

Key Takeaways for Business Owners and Investors:

Already in Force: SDRT relief for new UK listings (27 Nov 2025).
Pending Legislation: EMI scheme expansion, VCT/EIS investment limit changes, capital allowances
Businesses should review current structures, plan for tax efficiency, and monitor legislative progress. Early consideration allows optimal use of these measures once confirmed.

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