Budget 2025: Entrepreneurship in the UK

By Guy Broadfield Edward Hardy

10 Dec 2025 4 min read

Background image showing multiple shades of blue and purple sgements

Measures announced in the November Budget will have a big impact on entrepreneurs. Changes to VCT and EIS reliefs and the expansion of EMI options, a curtailing of capital gains tax relief on disposal to employee ownership trusts, and the welcome transferability of the £1m business property relief allowance between spouses will only add to the raft of succession and tax considerations business owners are currently grappling with.

Alongside more technical changes, the Government also published a “prospectus” for entrepreneurship in the UK, to accompany a call for evidence on how to incentivise and reward entrepreneurial talent in the UK through the tax system.

Key takeaways from that prospectus:

A formal recognition of the vital importance of risk-taking entrepreneurs to our economy – with an understanding that “words are cheap and action is what counts”;

A four-pronged strategy to boost, and retain, innovation and talent in the UK, focusing on:

R&D – a “strategic reset” of UK Research and Innovation (UKRI), to facilitate focused investment commitments to curiosity-led research and key business sectors, enhanced academic research funding and improvements to existing R&D tax incentives;
Procurement – establishing an “innovation marketplace” to fast-track innovative solutions, alongside other measures to align Governmental procurement policy more effectively with the potential and talent in the UK market;
Tax – reforms to already “world-leading” EIS and VCT tax reliefs to improve access to UK angel and venture investment (though VCT investor tax credits will reduce from 30% to 20% in a blow to investors themselves); enhancements to the tax-advantaged EMI share option scheme to incentivise and reward UK talent; and stamp tax relief to encourage listing in the UK, complimenting recent regulatory reforms to encourage entrepreneurs not only to grow their businesses here, but also to keep them in the UK long-term;
Public Finance Institutions – renewed and increasing commitments to national institutions such as the British Business Bank and National Wealth Fund to enable continued public funding of UK entrepreneurship, alongside measures to “mobilise institutional capital at scale” through partnerships with private capital – including pension funds, venture capital and family offices;

Reform of the high-skill visa system, including expansion of the High Potential Individual visa route, to attract the “brightest and best to start, scale and stay in the UK”.

The call for evidence seeks industry views on how better to allocate the wealth of UK private capital – in its many guises – to our world-leading entrepreneurial talent and venture capital scene through existing and new tax incentives. There is a welcomed recognition of the need to depart from an “incubator economy” that only motivates and rewards ambitious founders up to a certain point (hence the focus on EIS and VCT schemes over SEIS), and that in order to remove that “cliff-edge”, both existing and alternative sources of private capital need to be mobilised through appropriate incentivisation. There is an interesting comparison with US reinvestment tax reliefs used by the so-called “PayPal Mafia” to incubate strings of successful businesses and a recognition that comparable reliefs in the UK – such as Business Asset Disposal Relief – are considered by many to fall far short of their intended purpose.

Whilst “the tax system can only go so far”, we think it plays a fundamental role in shaping behaviour and capital allocation in the private sector. The announcements in the Budget show the government considers tax policy to be a key tool over the coming years to ensure the growth and retention of key talent and innovative business in the UK. This call for evidence represents a vital opportunity for founders, and their advisers, to shape the future of the UK’s tax environment for both start-up and scale-up businesses, and for their investors.

We have vast experience working with founders and family businesses and a detailed understanding of the issues the current tax system presents for them. We look forward to responding to the call for evidence (deadline 28 February 2026) to put forward our views on how the system can be improved for our clients, across all stages of the business lifecycle.

We would be delighted to discuss further with existing and new contacts, so please do get in touch.