3 minute read | December.03.2025
The UK Government’s Autumn Budget on 26 November 2025 included several new tax policies, many of which will be relevant to the UK’s tech sector and start-up ecosystem.
Here are our top 4 takeaways:
VCT and EIS investment structures are highly attractive to early-stage VC investors due to the generous tax relief they provide. Both regimes include income tax relief on investments up to certain limits and capital gains relief on exit when certain criteria are met. VCT investments additionally benefit from income tax relief on dividends.
The annual investment limit for each of VCT and EIS has doubled from £5 million to £10 million, subject to lifetime limits described below. Knowledge Intensive Companies (KICs) – those businesses which are particularly heavily reliant on scientific or technical skills which necessitate employing highly qualified staff with advanced qualifications – can now raise up to £20 million (increased from £10 million) in VCT and EIS funding each year.
Lifetime limits for VCT and EIS fundraising have also increased to £24 million (up from £12 million) for non-KICs and £40 million (up from £20 million) for KICs. This is good news for early-stage tech companies looking to attract investment through these favourable tax regimes.
Disappointingly for individual investors, income tax relief on qualifying VCT investment has been lowered from 30% to 20%. The budget did not address the Seed Enterprise Investment Scheme (SEIS), which does not appear to have been modified.
Particularly relevant to early-stage businesses, the government has made significant changes to the qualification criteria for EMI share options. This comprises:
It has since been confirmed that the onerous requirements to notify HM Revenue and Customs (HMRC) of the grant of EMI options will additionally be removed, effective 6 April 2027. You can read our full analysis here.
In a boost to later-stage private companies considering an IPO exit, the Government has introduced a three-year exemption from SDRT for newly listed companies, thereby effectively removing the 0.5% charge on the sale of shares in the first three years following listing.
The policy aims to help newly listed companies to secure higher initial valuations and liquidity, as well as boosting the attractiveness of the UK as a listing destination.
While the headline rates of income tax have not been increased for employment income, freezes on thresholds for each of the standard, higher and additional rate brackets have been extended from 2028 to 2030.
Freezing thresholds, a measure often regarded as ‘tax by stealth,’ relies on the concept of fiscal drag to bring more people into a higher tax bracket as pay increases over time to reflect inflation. This is particularly disappointing for those start-ups which have opted to pay lower salaries than larger institutions, instead with a generous equity package, whose employees now may face being brought into a higher tax bracket as their salaries increase by only marginal amounts to counter inflation.
If you have any questions or would like to discuss the implications of the budget on your business, please contact Rebecca Servian, Jonathan Rosen or Jacob Miller.