UK Plans a 10 Percent Founders' Relief and Bigger Share Options for Scaling Startups

The British government wants founders to start, scale and stay in the UK, and it has put that ambition in the title of a new policy document. "Entrepreneurship in the UK: Start. Scale. Stay." was published by HM Treasury on 28 October, with a foreword by Chancellor of the Exchequer John Healey.

The prospectus brings together a series of measures on tax, employee ownership, hiring and funding. For founders weighing where to build, several of them are significant.

A 10 Percent Rate for Founders

The headline measure is an expanded Founders' Relief. According to the document, from April 2027 eligible founders and early investors in high growth, innovative companies will benefit from a 10 percent rate of Capital Gains Tax on lifetime gains of up to £10 million.

The Treasury frames this as competing "with the best offers internationally." For a founder who builds and eventually sells a successful company, the rate on that first £10 million of gains could make a material difference to what they keep, and to what they might reinvest in the next venture.

Bigger Share Option Limits for Scaleups

The prospectus also expands the tools companies use to attract talent with equity. From April 2027, the individual share option limit under the Company Share Option Plan, known as CSOP, will double from £60,000 to £120,000.

The current £250,000 combined limit for EMI and CSOP options is being removed. According to the document, eligible employees will be able to hold up to £250,000 of EMI options and up to £120,000 of CSOP options, a total of £370,000 across both schemes. CSOP will also be rebranded as EMI2 to make clear its role as the follow on scheme to EMI.

The Treasury notes that in 2024 to 2025, around 4,840 companies used EMI and approximately 42,000 employees were granted tax advantaged options. Raising the ceiling is aimed squarely at scaling companies that have outgrown the original scheme but still need equity to compete for people.

Freeing Up Talent

Hiring is often the hardest part of scaling, and the document addresses it from two directions. First, the government says it will legislate so that non compete clauses will no longer be a barrier to hiring by the most promising startups and scaling firms. It plans to set out a detailed position in early 2027 before legislating.

Second, it is widening the High Potential Individual visa to graduates of the top 150 global universities. It also says it will work towards allowing the most highly skilled sponsored workers a visa curtailment period of up to six months, giving them longer to find a new job if a role ends.

Funding and Demand

The prospectus also highlights public investment. It sets out £1 billion over four years for priority innovation clusters working with UK Research and Innovation, £25 million for UKRI Venture Doctorates focused on entrepreneurship, and £100 million to expand access to robotic assisted surgery through NHS procurement, opening opportunities for innovative suppliers.

What Founders Should Take From It

None of this guarantees that more companies will stay. Tax and visa rules are only part of the picture, alongside access to capital, customers and experienced leaders. The document itself acknowledges that tax is only one of several factors in where founders choose to build.

For founders in the UK, the message is that the government is trying to address three of the biggest pressure points at once: what you keep when you exit, how you pay key hires with equity, and how freely you can recruit.

For founders elsewhere, the prospectus is a useful benchmark. Countries increasingly compete for entrepreneurs, and policies like these shape where companies are built. Many of the measures take effect from April 2027, and some still need legislation, so the details are worth watching closely. Anyone planning an exit or an equity scheme should take professional advice as the rules are finalized.