SEIS and EIS Explained: A Founder's Guide

SEIS and EIS are UK tax reliefs that make investing in early-stage startups more attractive to individual investors. Most UK angels use them, and many UK funds are built around them, so if you're raising in the UK, from pre-seed through to much later rounds, they'll shape how you do it. This guide explains what the SEIS and EIS schemes are, the main rules for companies, how to get advance assurance before you raise, and what you need to do after the money is in.

What are SEIS and EIS?

The Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) are tax reliefs for UK taxpayers who invest in small, early-stage, higher-risk companies. They exist to encourage investment in businesses that would otherwise struggle to raise money.

The EIS scheme has been running since 1994. SEIS was introduced in 2012 for the very earliest stage, where the risk is highest, so it offers investors more generous relief on smaller amounts.

The relief goes to the investor, not the company. But because the company has to meet the rules for its investors to claim, it's the founders who need to understand them and set the round up correctly.

Why SEIS and EIS matter when you raise.

The schemes are a big reason more money flows into UK startups. In the 2024 to 2025 tax year, 3,735 companies raised £1.575bn under EIS and 2,430 companies raised £276m under SEIS, according to HMRC's figures (EIS Association summary).

Most UK angels use them. Around nine in ten angels have used SEIS or EIS for their investments (Enterprise Research Centre), and many will only invest in companies that qualify.

A lot of UK funds are built around the schemes too. SEIS and EIS funds give their investors a managed, diversified portfolio while making the most of the tax relief. There's plenty of money that doesn't rely on the schemes, but in UK early-stage rounds they're a major source. And they reach well beyond seed: under EIS, companies can raise up to £10m a year, for up to seven years after their first sale, or ten for knowledge-intensive companies. Qualifying only opens doors: it doesn't stop you taking money from anyone else.

SEIS rules and limits.

SEIS is for very young companies. These are the main conditions a company has to meet when it issues SEIS shares:

• How much you can raise: up to £250,000 in total under SEIS, across all rounds.
• Company age: the trade must have started less than three years before the shares are issued.
• Gross assets: no more than £350,000 immediately before the shares are issued.
• Employees: fewer than 25 full-time equivalents.
• Independence: the company can't be controlled by another company, and must have a permanent establishment in the UK.
• Qualifying trade: most tech and tech-enabled businesses qualify, but some activities don't, such as financial services, property and some energy activities.
• Spending the money: it must be used for the qualifying trade within three years of the share issue.

SEIS tax relief for investors

SEIS gives investors 50% income tax relief on up to £200,000 a year, as long as they hold the shares for at least three years. Gains on the shares are free of capital gains tax. And if the company fails, investors can claim loss relief on what they lost after the income tax relief, against their income or gains.

SEIS also helps investors who have a capital gain to pay tax on. If they reinvest the gain in SEIS shares, half of the amount reinvested is exempt from capital gains tax. For example, an investor who sold other assets at a £100,000 gain and puts that £100,000 into SEIS shares gets £50,000 off their income tax bill. Half of the reinvested gain, £50,000, is also exempt from capital gains tax, which at a 24% rate saves a further £12,000.

EIS rules and limits.

EIS covers larger amounts and older companies. From 6 April 2026, the main limits for a company are:

• How much you can raise: up to £10m a year and £24m in total under EIS and other venture capital schemes.
• Company age: the first EIS investment usually has to be within seven years of the company's first commercial sale.
• Gross assets: no more than £30m before the shares are issued, and £35m after.
• Employees: fewer than 250 full-time equivalents.
• Spending the money: it must be used for the qualifying trade within two years.

The same independence and qualifying-trade rules apply as for SEIS.

Knowledge-intensive companies

Companies that spend heavily on research and development or innovation, and employ a high share of skilled staff, can qualify as knowledge-intensive. They get more room: up to £20m a year and £40m in total, ten years from first commercial sale instead of seven, and fewer than 500 employees. Many deep tech and life sciences companies qualify.

EIS tax relief for investors

EIS gives investors 30% income tax relief on up to £1m a year, or £2m if the extra is invested in knowledge-intensive companies. As with SEIS, there's a three-year minimum hold, no capital gains tax on gains and loss relief if the company fails.

EIS also offers deferral relief. An investor with a capital gain can put that gain into EIS shares and defer the tax, with no upper limit. The gain can come from up to three years before the investment or one year after it. The tax only becomes due when the EIS shares are sold, unless the investor reinvests again.

The April 2026 changes doubled several EIS limits, and some guides online still show the old figures. Check that the source you're using is up to date.

SEIS vs EIS at a glance.

EIS figures apply from 6 April 2026.

Using SEIS and EIS in the same round.

Many pre-seed rounds use both: the first £250k under SEIS, and the rest under EIS. That works well, as long as the order is right.

• SEIS shares go first. They must be issued before any EIS shares. If SEIS and EIS shares are issued on the same day, the SEIS shares won't qualify, so issue the EIS shares at least a day later.
• Use your SEIS allowance first. Once EIS shares have been issued, you can't go back and issue SEIS shares, so any SEIS allowance you haven't used is lost.
• Keep the two clearly separate. Make sure your share issues, investor paperwork and records show which shares are SEIS and which are EIS.

Your lawyer or platform will usually handle the mechanics, but it's worth knowing the order before you agree the round with investors.

SEIS and EIS advance assurance.

Advance assurance is an application to HMRC asking it to confirm, based on the information you give, that your company is likely to qualify for SEIS or EIS. It isn't a guarantee, but it's what investors look for. Almost every fund will want to see it, or clear evidence that the company qualifies, before completing.

How long it takes

It usually takes a few weeks. HMRC's response times vary, and are slower around busy tax deadlines such as 31 January and 5 April. Apply well before you expect to close, ideally before you start pitching, so it never holds up your round.

Doing it yourself or using a platform

Founders can apply themselves, and it's perfectly reasonable to. But the information has to be completely accurate, including your share capital, the nominal value of your shares and your business plan. Platforms such as SeedLegals and accountants offer it for around a couple of hundred pounds, which is usually worth it for the time and risk it saves.

What you'll need

• Your company details, articles of association and share capital
• A business plan and financial forecasts
• A description of the trade and how the money will be used
• Details of the proposed investment, and a named investor if possible

Things that can affect your investors' relief.

The schemes reward genuine risk-taking, and the rules are there to stop them being used purely to avoid tax. Some conditions apply when shares are issued, and some for three years afterwards, so it's worth knowing them before you set terms.

• Risk to capital. The investment has to be genuinely at risk, in a company aiming to grow over the long term. Arrangements designed mainly to protect investors from losing money can disqualify it.
• The type of share. SEIS and EIS shares must be ordinary shares. Shares with preferential rights to dividends or to assets on a winding up, or that can be redeemed, generally won't qualify. Be careful with liquidation preferences and anti-dilution rights in your term sheet.
• The 30% rule. An investor, together with their associates, generally can't own more than 30% of the company. Our dilution calculator shows each investor's holding after the round.
• Who invests. Employees generally can't claim, and there are limits on directors and connected people. Check before you accept money from anyone involved in the business.
• Timing. SEIS and EIS shares must be paid for in full, in cash, when they're issued. Take care with the order of issues (above) and with money received before the shares are issued.
• After the round. For three years, things like buying back investors' shares or changing control of the company can affect their relief.

Advance assurance flags most of these early. The biggest risk is time pressure: finding a problem days before completion, when you haven't done the work up front.

After the round: SEIS and EIS compliance.

Advance assurance happens before the round. After the money is in, there's a second step that lets your investors actually claim their relief.

1. Submit a compliance statement. For SEIS, this is the SEIS1 form, which you can submit once the company has traded for four months or spent at least 70% of the SEIS money. For EIS, it's the EIS1, once the company has traded for four months. The deadline is two years after the end of the tax year in which the shares were issued, but there's no reason to wait.
2. HMRC approves it. If everything is in order, HMRC sends the company an SEIS2 or EIS2, the authority to issue certificates.
3. Issue certificates to investors. The company sends each investor an SEIS3 or EIS3 certificate, which they use to claim relief through their tax return.

Investors can't claim until they have the certificate, and they notice when it's late. Getting the compliance statement in promptly is one of the easiest ways to keep them happy. For the next three years, keep the company within the rules so the relief isn't withdrawn.

Raising your round.

If you're raising your first round, our guide to pre-seed funding covers how much UK startups raise, at what valuations and from whom. Use the dilution calculator to plan your cap table and check each investor's holding, and our fundraising data room guide for the documents investors will ask for.