Chancellor plots boost for employee share schemes

The chancellor is reportedly assembling a support package aimed at entrepreneurs and small businesses ahead of November’s Autumn Budget.

The package is expected to include expansion of the Enterprise Management Incentive (EMI) scheme, and other investment-friendly tax incentives.

It’s a welcome bit of news that signals the government may prioritise growth and innovation for startups in the upcoming statement. SMEs have been waiting anxiously for updates as the date approaches.

What the government is planning for startups

Last week, Sky News reported that the government has proposed to raise the cap on EMIs ahead of the Autumn Budget, which is set to take place on November 26.

The EMI scheme is a tax-friendly plan which allows startups to sell shares to employees. It can motivate teams to feel truly part of a startup’s mission, while also offering attractive tax benefits.

Currently, the cap is set at £250,000 over a three-year period, and applies to businesses with assets of £30m or less, and fewer than 250 employees.

The proposed EMI reform would increase the £250,000 cap to allow scaling firms more flexibility to sell shares. It would also simplify rules around eligibility and some admin requirements which might currently put some startups off.

The reform would also make EMI more accessible to a wider range of businesses, not just early-stage tech companies.

How are business leaders reacting?

Regarding the proposal, Louise Jenkins, Managing Director at Alvarez & Marsal Tax, praised it as a positive sign the government is prioritising SMEs.

“The proposed expansion of the Enterprise Management Incentive scheme is a welcome signal that the government wants to champion small and medium-sized enterprises.

Extending the EMI cap would give growing businesses greater flexibility to attract and retain talent at a time when wage pressures and higher borrowing costs are already squeezing margins.

“If the government’s aim is to foster a more entrepreneurial economy, the focus should be on simplification as much as generosity; many small businesses still find existing EMI rules complex and administratively burdensome.”

That said, the run up to the budget so far has been less positive for small businesses. It’s been a difficult year for SMEs following tax rises and employer National Insurance increases.

And despite promises for swift reforms, it remains unclear if previous pledges to “fix” business rates by the Labour party will be followed through with on November 26^th.

Why this matters for startup founders

A stronger EMI scheme and broader tax reliefs have the potential to make hiring, retaining, and motivating top talent that much easier for startup founders. This offers a crucial advantage in a tough funding environment.

With venture capital still tight and borrowing costs high, incentives that ease the pressure on cash flow are as valuable as ever.

Founders should keep an eye on the Autumn Budget in the next few weeks, and be ready to review their existing EMI structures with an accountant or tax advisor if details are confirmed. Even small tweaks to share schemes can make a big difference in attracting and keeping the right people.

But while reforming the EMI scheme would be a welcome boost for founders, it’s far from the most urgent issue on the table. UK businesses will be looking for deeper, more immediate measures in the budget to ease costs and unlock real growth.