SEIS and EIS Explained: Tax Relief for Startup Investment (UK)

SEIS and EIS are two of the most powerful tools a UK startup has for raising money — because they make investing in your company genuinely attractive to investors through generous tax relief. Here’s how both schemes work, for founders and investors alike.

Why they matter

Early-stage investing is risky, so the government created SEIS and EIS to encourage it — by giving investors substantial Income Tax relief (and more) for backing qualifying young companies. For a founder, having SEIS/EIS status can be the difference between a round that fills and one that stalls, because it dramatically improves an investor’s risk-reward.

SEIS: the Seed Enterprise Investment Scheme

SEIS is for the earliest-stage, smallest companies. The headline reliefs for investors:

50% Income Tax relief on investments up to £200,000 per year
Capital Gains Tax exemption on gains from the SEIS shares (if held 3 years)
Loss relief if it doesn’t work out

For the company, broadly: under 3 years old, gross assets under £350,000, fewer than 25 employees, and a total SEIS raise of up to £250,000.

EIS: the Enterprise Investment Scheme

EIS is for slightly later-stage companies and allows much bigger raises. The investor reliefs:

30% Income Tax relief on up to £1 million a year (£2m for knowledge-intensive companies)
CGT deferral and exemption on the EIS shares
Loss relief

For the company, broadly: under 7 years old, gross assets under £15 million, fewer than 250 employees, up to £5 million a year and £12 million in total.

SEIS vs EIS — which, and when?

They’re not either/or. The typical path is:

Raise your first money under SEIS (up to the £250,000 limit), then
Raise later rounds under EIS

SEIS gives the bigger relief (50%) but with tighter company limits; EIS allows far larger raises at 30%. Sequencing them correctly keeps both reliefs available.

Advance assurance: do this first

Before you raise, get advance assurance from HMRC — its confirmation that your company is likely to qualify. Investors almost always ask for it, because it reassures them the tax reliefs will actually be available. It’s a crucial early step, and getting the application right speeds the whole raise up.

Watch the qualifying conditions

The rules are detailed — on company age, size, the type of trade (some are excluded), how the money is used, and the timing between rounds. Getting them wrong can cost your investors their relief, which damages trust and future fundraising. This is firmly “get advice” territory.

Make your raise investor-ready

SEIS and EIS can transform your fundraising — but only if your company qualifies and the paperwork is right. Our accountants for startups handle advance assurance, check you meet the conditions, and structure the raise so your investors get their reliefs and you stay compliant. Pair it with the wider picture in startup funding options, and our tax planning service keeps the whole structure efficient.

Frequently asked questions

What is the difference between SEIS and EIS?

Both give investors Income Tax relief for backing early-stage companies, but SEIS (Seed Enterprise Investment Scheme) is for the earliest-stage, smallest companies and gives investors 50% Income Tax relief, while EIS (Enterprise Investment Scheme) is for slightly later-stage companies and gives 30% relief. SEIS has lower company limits; EIS allows much larger raises. Many startups use SEIS first, then EIS.

How much tax relief do SEIS and EIS investors get?

SEIS investors get 50% Income Tax relief on investments up to £200,000 a year. EIS investors get 30% relief on up to £1 million a year (or £2 million if at least £1 million is in knowledge-intensive companies). Both also offer Capital Gains Tax advantages and loss relief, making them very attractive to investors.

How does a startup qualify for SEIS or EIS?

The company must meet conditions on age, size, trade and how the money is used. Broadly, SEIS is for companies under 3 years old with gross assets under £350,000 and fewer than 25 employees, raising up to £250,000 in total. EIS allows older, larger companies (under 7 years, under £15m gross assets, under 250 employees) to raise up to £5m a year and £12m in total. Certain trades are excluded.

What is SEIS/EIS advance assurance?

Advance assurance is HMRC's confirmation, before you raise the money, that your company is likely to qualify for SEIS or EIS. Investors almost always want to see it before investing, because it gives them confidence the tax reliefs will be available. Getting advance assurance is a key early step in an SEIS/EIS raise.

Can a company use both SEIS and EIS?

Yes — and many do. A common path is to raise the first chunk under SEIS (up to the £250,000 SEIS limit) and then raise further rounds under EIS. There are rules about the order and timing, so it's worth planning the sequence carefully to keep both sets of reliefs available to investors.

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Reviewed by Provense Accountants

Written and reviewed by our team of qualified accountants (AAT-regulated). This guide is general information, not personal tax advice — book a free consultation for advice on your situation.