HM Treasury

HM Treasury drove two structural changes to UK startup finance in spring 2026. On 6 April 2026, income-tax relief on Venture Capital Trusts fell from 30% to 20%, a policy reversal that triggered a record £917.7m fundraising rush in the preceding year as retail investors front-ran the cut . The same day, Treasury's Enterprise Management Incentives reform raised the gross-assets test from £30m to £120m, doubled the employee limit from 250 to 500, doubled the share-option pool from £3m to £6m, and lifted EIS/VCT lifetime company investment caps to £24m .

HM Treasury is the UK's finance and economic ministry, responsible for public spending, tax policy, and financial regulation. The current Chancellor is Rachel Reeves, who is also co-chair of the Defence Investors' Advisory Group alongside the Defence Secretary. Treasury works with DSIT on industrial strategy, oversees funding bodies including the British Business Bank, and sets the legislative framework for venture incentives including EIS and VCTs. It coordinates tax administration with HMRC and works with the FCA on the regulatory perimeter for financial services.

The EMI and VCT changes arrive as part of Chancellor Reeves's broader industrial strategy push, alongside the £500m Sovereign AI Unit, the British Business Bank's new direct-investment mandate, and over £8bn of new state instruments announced since the autumn. The policy tension is explicit: broader EMI eligibility retains more scaleups within the UK tax-advantaged scheme, but the simultaneous VCT relief reduction reduces the pool of retail capital that funds the early-stage companies those scaleups grew from. Treasury's own estimate puts the EMI reform benefit at roughly £100m a year across around 1,800 companies; the VCT cut is projected to reduce annual retail fundraising by approximately 65%.

HM Treasury's Office of Financial Sanctions Implementation (OFSI) has tracked US Treasury's Office of Foreign Assets Control (OFAC) on Iranian oil routing throughout the 2026 conflict, coordinating on secondary-sanctions designation actions targeting vessels and intermediaries running IRGC-linked crude. UK-based commodity traders and shipping firms clearing dollar transactions through London correspondent banks face the same secondary-sanctions exposure as their US counterparts when dealing with OFAC-designated entities.

The 24 May 2026 expiry of OFAC's General Licence V on Hengli Petrochemical is the most direct near-term test of that coordination. If OFAC enforces secondary sanctions against Chinese banks clearing dollar Hengli payments after Sunday, OFSI is expected to issue a parallel UK designation to close any gap in the dollar-clearing chain via London. The 19 May OFAC sb0502 action — designating 50+ entities including Amin Exchange and 19 vessels — did not ADD mainland Chinese refineries, signalling that the Hengli expiry remains the single hard-dated enforcement moment rather than a rolling designation programme .

Chancellor Reeves's co-chair role on the Defence Investors' Advisory Group reflects Treasury's dual exposure: sanctions enforcement on the revenue side and defence finance on the spending side. UK forecourt petrol prices remain around 165-170p per litre through Q3 2026 as long as the Hormuz structural insurance premium — priced through Lloyd's war-risk underwriting — persists in the Platts wholesale curve.