SEIS and EIS are HMRC-approved investment schemes that make early-stage UK companies more attractive to investors by offering significant tax reliefs. This guide explains the rules, the limits, and how to secure HMRC advance assurance before you raise.
SEIS and EIS don't provide grant funding directly - there's no application form and no cash from the government into your bank account. What they do is make your business dramatically easier to fund by reducing the risk for private investors. A business with SEIS-eligible status can tell investors they'll receive 50p of income tax relief for every £1 invested - which transforms the effective cost of an investment from £1 to 50p before any return. For an early-stage business trying to raise its first external round, this is often the difference between raising and not raising.
SEIS is designed for the earliest stage of investment. To qualify, the company must have been trading for less than 3 years, have fewer than 25 employees, and have gross assets of no more than £350,000 before the investment. The maximum an individual investor can put in under SEIS is £200,000 per tax year. The company can raise up to £250,000 under SEIS in total.
The tax reliefs for SEIS investors are substantial. Income tax relief of 50% on the amount invested, provided the shares are held for at least 3 years. Full capital gains tax exemption on SEIS gains if income tax relief was claimed. Loss relief - if the investment fails, investors can offset the loss (net of the initial income tax relief received) against income tax, not just capital gains. Taken together, a basic rate taxpayer can invest in a startup knowing their maximum downside is around 27.5p in the pound.
EIS covers a broader range of companies and larger investment amounts. Companies can raise up to £5 million per year under EIS (and up to £12 million lifetime). Investors can put in up to £1 million per year (£2 million if at least £1 million goes to knowledge-intensive companies). The income tax relief rate is 30% rather than 50%, but otherwise the relief structure is similar - CGT exemption after 3 years, loss relief, and CGT deferral relief on reinvested gains.
To qualify for EIS, a company must have fewer than 250 employees, gross assets below £15 million, and must not be more than 7 years post-first commercial sale (10 years for knowledge-intensive companies). There are complex rules around qualifying trades - certain excluded activities including property development, financial services, and energy generation in most cases.
Before you start raising, apply for Advance Assurance from HMRC. This is a confirmation (not a guarantee) that HMRC expects your company and the proposed share issue to qualify. Investors feel significantly more confident with advance assurance in hand - it demonstrates you've done the process properly and they won't find out two years later that the relief wasn't available. The application goes to HMRC's Small Company Enterprise Centre and typically takes 4-6 weeks. You'll need your memorandum and articles of association, a business plan, details of the share issue, and a description of the trade.
Advance assurance is especially important for SEIS because the eligibility window closes quickly - you only get one SEIS raise, and getting it wrong means losing the relief for all investors in that round.
SEIS/EIS isn't a grant, but the businesses that raise investment under these schemes often need grant funding alongside their equity. An Innovate UK SMART grant for the technology development sits well alongside an EIS raise for commercial scale-up - in fact, having active grant funding often makes EIS raises easier because it's independent validation of the technical credibility of the project. Grantscom monitors grant opportunities that are commonly used alongside equity raises, so you can see both in the same matched feed.
Grantscom searches thousands of live grants and tenders every day and scores them against your business profile.
Start free →