INSIGHTS / Blog

If you’re raising early-stage investment in the UK, chances are you’ve heard of SEIS and EIS. These government-backed schemes are designed to encourage investment in young, innovative businesses by offering generous tax reliefs to investors. But while they can be powerful tools, they’re not always straightforward, and many founders aren’t quite sure how (or when) to engage with them.

Here’s a practical explainer to help you understand what SEIS and EIS are, why they matter and how to use them effectively as part of your fundraising strategy.

What are SEIS and EIS?

The Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) are UK government initiatives that make it more attractive for private investors (including angels and early-stage funds) to invest in small, high-risk companies.

They do this by offering investors income tax reliefs, capital gains tax exemptions and some downside protection if things don’t go to plan. This can significantly reduce the perceived risk for early backers, particularly important for startups operating in complex or long-horizon sectors like deep tech, net zero and digital health.

In short:

• SEIS is for the earliest-stage companies.
• EIS supports slightly more established businesses raising follow-on rounds.

Key differences: SEIS vs EIS

	SEIS	EIS
Max investment per company	£250,000 total (lifetime)	Up to £12 million total (lifetime)
Max investment per investor	£100,000 per tax year	£1 million per tax year (£2m if into knowledge-intensive companies)
Income tax relief	50%	30%
Company age limit	<3 years	<7 years (or 10 years for some sectors)
Eligible company size	<25 employees; <£350k gross assets	<250 employees; <£15m gross assets
Use of funds	Must be spent within 3 years on a qualifying trade or on preparing to carry out such a trade (e.g. R&D, hiring)	Must be spent within 2 years of the investment (or of starting to trade, whichever is later) on a qualifying business activity

Most early-stage companies start with SEIS for their pre-seed or seed rounds, then move to EIS for Series A and beyond.

Why SEIS and EIS matter to investors

Tax incentives aren’t just a bonus, they can be a deciding factor in whether an angel or early-stage investor chooses to back your startup. SEIS and EIS make investments less risky by offering:

• Income tax relief (up to 50% for SEIS)
• Capital gains exemptions on profits from the investment
• Loss relief if the business fails.

These incentives are particularly attractive in riskier sectors, which is why many investors will ask if you have SEIS/EIS “advance assurance” in place before making a decision.

What founders need to do

Here’s what to consider if you want to make SEIS or EIS part of your fundraising strategy:

1. Check your eligibility

Most UK-based, early-stage, high-growth companies qualify, but there are restrictions. You must be trading in an eligible sector (some sectors like banking or property are excluded) and meet criteria around age, size and use of funds.

2. Apply for Advance Assurance

Advance Assurance is a pre-approval from HMRC that your company should qualify for SEIS/EIS if your round closes as planned. It’s not mandatory, but it’s often expected by investors. Apply well in advance as it can take several weeks to process.

3. Decide how to allocate SEIS/EIS

If you’re offering both in a single round, SEIS funding must be used first as it’s more generous for investors, but subject to lower limits. Be clear in your investor materials how the round is structured and how much of it will qualify under each scheme.

4. Factor it into your timelines

If SEIS/EIS eligibility is a key selling point, start the process early. This includes checking eligibility, preparing the required documents and factoring the time it takes to secure Advance Assurance.

Common misconceptions (and how to avoid them)

• “SEIS/EIS will get me funded”

  SEIS and EIS make your startup more attractive, but they don’t guarantee investment. You still need a compelling proposition, credible team and clear growth plan.

• “All investors are eligible”

  Not all investors can claim SEIS/EIS relief (e.g. some funds or international investors). Make sure you understand the rules or ask your investors if they’re eligible.

• “I’ll just apply after I raise”

  You can apply post-investment, but it’s far riskier. Investors will likely want assurance upfront.

• “It’s too soon for me”

  Even at pre-seed, SEIS can be helpful. Support programmes can walk you through the process.

SEIS and EIS can be powerful tools in your early-stage funding journey, but they’re not silver bullets. Understanding how they work and preparing early, can help make your startup more investable and de-risk the process for your backers.

This article is for general information only and doesn’t constitute legal, tax or investment advice. Always consult a professional adviser for your specific circumstances.