SEIS and EIS Explained for UK Founders
If you are raising money from UK angels, two acronyms will come up in almost every conversation: SEIS and EIS. These schemes give investors generous tax relief for backing young companies, which makes your round easier to say yes to. This guide explains how SEIS and EIS work from the founder's side, what advance assurance is, and how to plan a round so you do not lose the relief by accident.
Key takeaways
- SEIS and EIS are UK tax reliefs for people who invest in qualifying young companies. The relief goes to the investor, not to your company.
- SEIS gives investors 50% income tax relief, and a company can raise up to £250,000 under it. EIS gives 30% income tax relief.
- You can apply to HMRC for advance assurance before the round, which gives investors comfort that your company looks likely to qualify.
- The rules are detailed and the order of events matters, so plan the round with an accountant or lawyer and check current limits on GOV.UK.
Picture two pitches to the same angel investor. Both companies are promising. One founder says, "We have SEIS advance assurance, and we can issue compliance certificates as soon as shares are allotted." The other says, "I think we probably qualify." The first founder has removed a worry and added a reason to invest. That is the practical value of understanding these schemes well.
A quick note before we go further: this is general information about UK investment schemes, not tax, legal or investment advice. The rules are detailed, they change from time to time, and getting them wrong can cost your investors their relief. Work with an accountant or a startup lawyer who knows SEIS and EIS, and check the current guidance on GOV.UK before you rely on any figure.
What SEIS and EIS are, in plain English
The Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) are government schemes designed to encourage individuals to invest in small, higher-risk UK companies. Investing in startups is risky, because many fail. The schemes soften that risk by giving qualifying investors tax relief on the money they put in, plus other potential benefits that apply when shares are held for the required period.
The key thing for founders to grasp is who benefits. Your company does not receive a tax break. Your investors do. Your job is to make sure the company and the shares you issue meet the conditions, so the investors can claim. That makes SEIS and EIS a sales tool for your round as much as a compliance task.
SEIS: the earliest money
SEIS is aimed at very young companies raising their first outside money. It offers the highest rate of relief, which reflects the higher risk.
EIS: the next stage
EIS works in a similar way but suits companies that are a little further along and raising larger sums. The income tax relief is 30%, and the scheme comes with its own company, investor and share conditions. Many companies use SEIS for the very first money in and EIS for later rounds, sometimes within the same funding period.
How they compare at a glance
| SEIS | EIS | |
|---|---|---|
| Stage | Very early, first outside money | Early but further along |
| Investor income tax relief | 50% | 30% |
| Company raise limit | Up to £250,000 under SEIS | Higher limits apply; check GOV.UK |
| Advance assurance | Available from HMRC | Available from HMRC |
| Who benefits | Qualifying individual investors | Qualifying individual investors |
Does your company look likely to qualify?
Both schemes have conditions about the company, the trade, the shares and the investors. The exact tests and thresholds are set out in HMRC guidance, and they can change, so treat this as a list of areas to check rather than a definitive rulebook.
- Company age and size. Both schemes set limits on how long the company has been trading and how large it is, for example by assets and headcount. SEIS limits are tighter than EIS limits.
- Where the company is based. The company needs a permanent establishment in the UK.
- The trade. The business must carry on a qualifying trade. Some activities are excluded, so check that yours is not on the list.
- Independence. The company generally must not be controlled by another company.
- The shares. Investors usually need ordinary shares paid for in cash, without preferential rights that the rules do not allow.
- The investors. Investors must not be "connected" with the company in ways the rules prohibit, for example through a large shareholding or certain employment links.
- Use of the money. Funds must be spent on the qualifying business activity within the required period.
Common mistake
Issuing shares with special rights, such as a liquidation preference, to SEIS or EIS investors because a template term sheet included them. Some share rights can make the shares fail the conditions. Ask your lawyer to check the share terms against the scheme rules before anyone signs.
Advance assurance: why you should apply first
Advance assurance is an optional step where you send HMRC details of your company and planned share issue, and HMRC indicates whether it looks likely to qualify. It is not a guarantee, and HMRC still checks the actual share issue later. But many angels and syndicates expect to see it before they commit, so in practice it is close to essential for a SEIS or EIS round.
What an application usually includes
- Your company details, registration number and articles of association
- A business plan describing the trade and how the money will be used
- Recent financial information or forecasts
- Details of the planned share issue and, where you have them, named or prospective investors
- Your shareholder agreement or draft subscription documents
HMRC's processing times vary, so build the wait into your timeline. If you plan to close a round before the end of the UK tax year on 5 April, mid-February is already late to start an application from scratch. Investors often care which tax year their relief falls into, so talk to them early about timing.
Pro tip
Write the advance assurance business plan as a short, clear document rather than reusing your pitch deck. Explain what the company does, who it serves, how the money will be spent and why the business carries real risk to capital. Clarity speeds things up.
How to run a SEIS or EIS round step by step
The order of events matters more than most founders expect. A small slip, such as issuing EIS shares before SEIS shares on the wrong day, can affect relief. Use these steps as a planning outline and confirm the details with your adviser.
- Check eligibility early. Before you pitch anyone, run through the company, trade, share and investor conditions with your accountant.
- Decide the mix. Work out how much you hope to raise under SEIS and how much, if any, under EIS.
- Apply for advance assurance. Submit your application to HMRC with a clear business plan and the planned share details.
- Prepare clean documents. Update your articles and subscription agreement so share rights fit the scheme rules.
- Collect commitments. Share the advance assurance letter with investors and agree amounts and timing.
- Issue shares in the right order. Allot shares, receive cash and file the share allotment with Companies House. If you mix SEIS and EIS, your adviser will help you sequence the issues correctly.
- Spend the money on the qualifying trade. Keep records that show how the funds were used.
- File the compliance statement. After the qualifying conditions are met, submit the compliance statement to HMRC.
- Send certificates to investors. Once HMRC approves, you can issue compliance certificates so investors can claim their relief.
Hypothetical example
Imagine Amara, who runs a two-person software startup in Leeds. She wants to raise money from five angels. In January she checks eligibility with her accountant, then applies for SEIS advance assurance with a six-page business plan. While she waits, she updates the articles so the new shares are plain ordinary shares. When the assurance letter arrives, she shares it in her investor update, and three angels commit within two weeks. Her shares are allotted in March, she files with Companies House, and she diarizes the compliance statement for later. Each investor receives a certificate once HMRC approves. The names and timeline are made up for illustration.
Keeping the relief safe after the round
Closing the round is not the end of the story. Investors usually need to hold their shares for a minimum period to keep the relief, and the company needs to keep meeting certain conditions during that time. Some events, such as returning money to investors, changing the trade, or a sale or restructure, can affect relief. That is why a little ongoing housekeeping pays off.
- Keep a scheme log. Record every share issue, the scheme used, the date and the certificates sent.
- Check before big changes. Talk to your adviser before a pivot, a new share class, a buyback or an acquisition offer.
- Watch future rounds. New investors may want rights that interact with earlier SEIS or EIS shares. Flag this when negotiating term sheets.
- Answer investor questions quickly. Investors claim relief through their own tax returns, so lost certificates or slow replies create friction.
A simple SEIS and EIS tracker template
Copy this table into a spreadsheet and add one row per share issue. The names, dates and amounts are made up for illustration only.
| Issue date | Investor | Scheme | Amount (example) | Shares issued | Allotment filed? | Compliance statement sent? | Certificate issued? |
|---|---|---|---|---|---|---|---|
| 2027-03-10 | Investor A | SEIS | £40,000 | 4,000 | Yes | Pending | No |
| 2027-03-10 | Investor B | SEIS | £25,000 | 2,500 | Yes | Pending | No |
| 2027-09-01 | Investor C | EIS | £100,000 | 8,000 | Yes | Pending | No |
Add a notes column for anything unusual, such as an investor's question or a document you are waiting for. This one sheet will save you hours when a future investor's lawyer runs due diligence.
Talking about SEIS and EIS with investors
Most experienced UK angels know these schemes well, but first-time investors and friends may not. Explain the basics simply and point them to GOV.UK or their own adviser for anything personal. Never promise a specific tax outcome, because it depends on each investor's circumstances.
A short paragraph in your investor materials can do the job: "We have received SEIS advance assurance from HMRC. We expect to issue compliance certificates after the qualifying conditions are met. Investors should take their own tax advice." Keep the tone confident but careful.
It also helps to know where SEIS and EIS sit beside other funding routes. Some equity crowdfunding platforms, such as Crowdcube, run campaigns for companies with advance assurance, and many angel syndicates focus on eligible deals. If you are considering an accelerator such as Entrepreneur First, check how its terms interact with the schemes.
Common mistake
Accepting money before the paperwork is ready, then issuing shares months later. Investor cash sitting in the company without shares being issued can cause problems for relief. Agree the process with your adviser and keep the gap between payment and allotment short.
Your SEIS and EIS action checklist
- Read the current SEIS and EIS guidance on GOV.UK
- Book a session with an accountant or lawyer who knows the schemes
- Check company, trade, share and investor conditions
- Decide how much to raise under SEIS and under EIS
- Write a short, clear business plan for advance assurance
- Apply to HMRC and build the wait into your timeline
- Update your articles and subscription documents
- Issue shares in the agreed order and file allotments
- Submit the compliance statement and send certificates
- Keep a tracker and check with your adviser before big changes
Frequently asked questions
Does my company get any tax benefit from SEIS or EIS?
Not directly. The reliefs go to qualifying individual investors. The benefit for your company is that the round becomes more attractive, which can make it easier and faster to raise money.
Is advance assurance required?
It is optional under the rules, but many investors expect it. It shows HMRC has looked at your plans and thinks the company is likely to qualify, although it is not a final guarantee.
Can I use SEIS and EIS in the same round?
Many companies do, but the order and timing of share issues matter. Ask your adviser to plan the sequence so each investor's relief is protected.
Can founders claim SEIS or EIS on their own shares?
Usually the connection rules make this difficult or impossible for founders and their close associates, though details depend on the situation. Check with your adviser before assuming either way.
Related reading
The bottom line
SEIS and EIS can turn a nervous "maybe" into a confident "yes" from UK angels. Check that your company looks likely to qualify, apply for advance assurance early, keep your share terms simple and issue shares in the right order. Then keep tidy records so investors can claim and future rounds go smoothly.
If you hope to close before the tax year ends on 5 April, start this week. Book time with your adviser, draft your business plan and get the application moving.
