Our thoughts on the Autumn Budget 2025

This year’s Budget didn’t rewrite the rulebook for innovation, but it did introduce several changes that matter for anyone building or backing early-stage and scaling AI companies. Here’s a brief breakdown of some of the key factors with input from Andy Wilson, Tax Director at Ascendis Accountants, one of our key partners.

EIS and VCT limits are increasing (from April 2026)

The biggest structural change for our ecosystem is the expansion of the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) rules.

Confirmed changes:

• Gross assets limit doubled
  £15m → £30m (pre-investment)
  £16m → £35m (post-investment)
• Annual investment limit doubled
  £5m → £10m for standard EIS companies
  £10m → £20m for Knowledge-Intensive Companies (KICs)
• Lifetime investment cap expanded
  £12m → £24m (standard)
  £20m → £40m (KICs)
• VCT relief adjusted
  VCT income tax relief will fall from 30% to 20%
  EIS remains at 30% and SEIS at 50%

Why it matters:

These changes will enable more companies to take advantage of these relief and attract investment. The reduction in income tax relief for VCT investments may see a shift away from these into EIS and even SEIS investments.

Stronger EMI Options

From 6 April 2026, the rules for EMI share options will be significantly expanded. The employee limit will increase from 250 to 500, the gross assets test will rise from £30m to £120m, and the company-wide option limit will double from £3m to £6m. The maximum option holding period will also extend from 10 to 15 years.

From April 2027, companies will no longer need to notify HMRC when granting an EMI option.

These changes are long overdue. The previous thresholds had not kept pace with the needs of growing companies, meaning many scaleups were unable to use EMI as a tool to attract and retain key talent. Extending the option life to 15 years is also a practical improvement; we’ve seen many cases where options approached their 10-year limit and had to be reissued unnecessarily.

Overall, this is a meaningful upgrade to a scheme that remains one of the most effective ways for high-growth companies to incentivise and keep great people.

More clarity around AI, compute and data infrastructure

The Budget didn’t expand AI or compute funding directly, but it does sit within a broader policy shift - reinforced by the UK Compute Roadmap - that places greater emphasis on national compute, data infrastructure and long-term AI capacity. For AI founders, this is still an important signal: access to compute and GPUs is one of the sector’s biggest early bottlenecks, and stronger policy focus in this area is welcome.

R&D support and innovation funding are being simplified

While not a headline-grabber, the ongoing work to streamline R&D funding routes matters.
Founders often face delays and ambiguity in navigating R&D claims and grant opportunities. Any simplification here, paired with Innovate UK’s expanding programmes, is a net benefit - especially for pre-seed and seed-stage AI companies trying to validate IP at speed.

What this means for founders and investors in early-stage AI

A consistent theme in both policy and wider commentary:
The UK wants more companies to scale here, not just launch here.

For founders

• It should become easier to raise larger follow-on rounds through EIS.
• More AI companies will qualify as Knowledge-Intensive Companies.
• Grant funding and compute support are moving in a clearer direction.

For investors

• Broader EIS eligibility increases access to more mature, lower-risk opportunities.
• VCT changes may shift capital toward EIS/SEIS-backed AI funds.
• The overall environment favours funds with structured portfolio support - including models like venture studios - that can help companies reach the new, higher ceilings.
  
  

Thanks to Andy Wilson, Tax Director at Ascendis for his insights in this summary, Ascendis have summarised the key  measures in this helpful resource to keep you informed of the latest developments in more detail.

The tax benefits available under S/EIS qualifying investments are dependent on individual circumstances and may be subject to change in the future.