Autumn Budget 2025: Financial Services Sector Commentary

We support the changes to ISAs that will come in from April 2027 and encourage firms in the sector to extend services to help ISA savers to make the most of the £8,000 investment only ISA allowance, and to invest it in the UK. Savers will be apprehensive about the risks of their capital value decreasing and education will be crucial. Offering products tailored to this emerging market, such as hybrid options that combine the £12,000 cash allowance with the investment-only allowance, will help.

EMI schemes will be expanded – employee limit increasing to 500 (from 250), gross assets test to £120 million (from £30m), company share option limit doubled to £6 million from April 2026. Exercise period extended from 10 to 15 years. EMI notification removed from April 2027.

The changes to expand the eligibility for EMIs is certainly a positive, growing companies now have more opportunity to share the growth with their employees tax efficiently, this is a significant employee retention strategy that ambitious companies should be using to keep their best people around.

VCT and EIS – Investment limit increased to £10m (from £5m) (£20m for Knowledge Intensive Companies), lifetime company investment also increased to £24m (£40m for KICS). Gross assets test increasing to £35m (previous £30m) from April 2026. Though VCT relief reduced slightly from 30-20%.

There has been a longstanding push to raise investment limits, so the recent changes to the Enterprise Investment Scheme (EIS) are a welcome development. It represents an important step in “re‑engineering” the scheme to prioritise longer‑term commitments rather than focusing solely on the early stage. This adjustment is intended to encourage sustained growth, particularly for businesses with longer development timelines that may have been excluded under the previous fixed early‑stage window.

However, there are potential drawbacks. The reduction in tax relief could discourage investors from participating in these structures, given the inherent level of risk involved. This may place additional strain on the funding available to such businesses and risk producing the opposite effect of the intended goal namely, supporting ambitious and growing companies in their journey toward scale and success.

The changes to expand the eligibility for EMIs is certainly a positive, growing companies now have more opportunity to share the growth with their employees tax efficiently, this is a significant employee retention strategy that ambitious companies should be using to keep their best people around. The Chancellor has take a few steps to keep investment in the UK and the improvements in the EIS scheme will help to do that, allowing investors to invest more to help businesses grow.

The government has introduced a pro-growth regulatory plan aimed at cutting c.£6bn in business compliance costs by 2030. This includes efforts to simplify financial regulations such as the PRA’s proposal to reduce reporting requirements. For asset managers, this could translate into fewer or more streamlined filings, quicker fund approvals, and a stronger emphasis from the FCA on promoting competitiveness. Compliance teams are anticipating some reduction in administrative burden and will likely stay engaged with upcoming regulatory changes to take advantage of these developments.

A new concierge-style service is also being launched to help international financial firms navigate the UK market and regulatory environment. This initiative is designed to make it easier for global asset managers and fintech companies to set up operations in the UK. It could bring new players and expanded teams to the UK market, boosting competition and reinforcing London’s role as a financial hub (and hopefully Manchester’s too!). Established firms may also use the service to streamline the process of launching new ventures or bringing overseas funds into the UK, with the promise of more efficient regulatory support.