Posted Friday 5th December 2025
The Autumn Budget 2025 introduced some of the most significant reforms in recent years for high-growth companies raising capital or managing employee equity. While the changes create new opportunities, particularly through increased EIS and VCT investment limits, they also introduce fresh constraints and a more complex risk environment for corporate reorganisations and tax reliefs.
The Budget delivered long awaited increases to the fundraising thresholds for EIS and VCT-backed companies, the most substantial uplift since the schemes were introduced. These changes reflect the capital needs of modern UK growth companies, especially in deep-tech and life sciences, where early-stage development frequently requires £10–20 million before commercial traction.
EIS and VCT: higher company limits (from April 2026)
These reforms expand the pool of companies able to use EIS and VCT for later-stage rounds, helping to better support scale-ups beyond Series A.
Reduction in VCT investor relief
Despite increased headroom for companies, the Budget reduces VCT income tax relief for investors from 30% to 20%. This may soften investor appetite and could impact the availability of VCT capital in the medium term.
The Budget introduced an expansion of the EMI regime, opening the scheme to a far broader range of scale-ups.
Major EMI changes from April 2026:
This is a major shift for later-stage companies that previously outgrew EMI eligibility.
However, an important drawback:
The CGT relief for sales to Employee Ownership Trusts (EOTs) is being reduced from 100% to 50%, weakening incentives for EOT succession planning.
The Budget significantly tightens the capital gains tax rules governing share exchanges and corporate reorganisations.
Previous position:
Many restructures qualified for no-gain, no-loss treatment where the transaction was commercially motivated rather than tax driven.
New regime:
A stricter purpose-based anti-avoidance test now applies. Relief can be denied even for commercially necessary transactions where one of the main purposes is to secure:
Action point:
Obtain section 138 clearance for any share exchange or reorganisation. Clearance is now a critical risk-management step.
What this means for founders
The Autumn Budget expands both fundraising headroom and EMI access for UK growth companies, but founders must also navigate reduced investor incentives and tougher anti-avoidance scrutiny in restructures. Early legal and tax advice is now essential for any significant fundraising, option scheme design or group reorganisation.
If you would like support planning around these changes, our team can help.
This article is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action.
Parliament has now passed the Employment Rights Bill, which has now become the ‘Employment Rights Act 2025’. The Act represents the biggest change to employment laws that this country has seen in a generation.
The fresh capital will enable Nova Biochem to build out its first pilot plant in Sweden, scale its technology, initiate industry integration, expand its team, and move toward commercial production.
Our second Impact Report as a certified B Corp highlights our commitment to sustainable and ethical business practices and using business as a force for good.
The UK Home Office has announced a series of significant immigration rule changes that will affect employers, workers, students, and international applicants over the next two years.
UKVI has begun the next phase of its transition to a fully digital immigration system, replacing physical documents with eVisas for millions of applicants.
We have partnered with Ecologi and are now a Climate Action workforce. Through Ecologi we are planting trees across the world to grow our own forest to offset our carbon emissions.
