SEIS and EIS, explained for founders
What the two schemes actually give an investor (with the maths), which companies qualify, the limits and the traps, why 'advance assurance received' is the line that converts, and how to get it before you list.
The Seed Enterprise Investment Scheme and the Enterprise Investment Scheme are the reason a certain kind of UK investor will look at your raise at all. They exist because early-stage equity is risky and illiquid, and the Treasury decided the way to get private money into it was to change the maths for the person taking the risk. Understand the maths and you will understand why "SEIS/EIS eligible, advance assurance received" on a listing is worth more than any adjective you could write.
What the investor gets
SEIS
- 50% income tax relief on up to £200,000 invested in a tax year. Invest £20,000, get £10,000 back against that year's income tax.
- No capital gains tax on the shares if held for three years.
- Loss relief if it fails: the net loss, after the 50% relief, can be set against income tax at the investor's marginal rate.
- Reinvestment relief: half of a capital gain reinvested into SEIS shares is exempt from CGT.
EIS
- 30% income tax relief on up to £1m a year (£2m if the excess is in knowledge-intensive companies).
- No CGT on the shares after three years; loss relief as above; and CGT deferral on gains reinvested.
The maths that makes investors look
A 45% taxpayer puts £20,000 into an SEIS company. They get £10,000 income tax relief immediately, so their net cost is £10,000. If the company fails completely, they claim loss relief on the £10,000 at 45%: £4,500 back. Their total loss on a £20,000 investment that went to zero is £5,500 — about 27p in the pound. If it succeeds, the gain is tax-free. That asymmetry is why SEIS investors exist, and why a listing without the scheme competes at a disadvantage against one with it.
Does your company qualify?
SEIS — the headline tests
- Trading for less than three years.
- Fewer than 25 full-time-equivalent employees.
- Gross assets under £350,000 immediately before the investment.
- Raising no more than £250,000 in total under SEIS.
- Not previously raised under EIS or a VCT.
EIS — the headline tests
- Generally within seven years of the first commercial sale (ten for knowledge-intensive companies).
- Fewer than 250 employees (500 if knowledge-intensive).
- Gross assets under £15m before and £16m after.
- Raising no more than £5m in any twelve months and £12m in total (£10m / £20m knowledge-intensive).
Both
- A permanent establishment in the UK.
- A qualifying trade. Most are. Excluded: dealing in land or shares, banking and financial services, leasing, legal and accountancy services, property development, farming, hotels and nursing homes, energy generation, and a few more. If your business is mostly one of those, the scheme is not available.
- New full-risk ordinary shares, paid for in cash. Not preference shares, not loan notes, not convertibles at the point of issue.
- The money must be used for the growth and development of the business within two years (SEIS: three), not to buy another business or repay debt.
- No pre-arranged exit and no guaranteed returns to the investor.
- The investor must not be connected — broadly, not an employee and holding under 30% — which rules out founders investing in their own company under the schemes.
Advance assurance — get it before you list
HMRC will tell you in advance whether a proposed share issue is likely to qualify. It is not compulsory and not a guarantee, but experienced investors ask for it and many will not invest without it. The application needs: a business plan, financial forecasts, the latest accounts, the articles of association, details of the proposed investment and the investors you expect (at least one named prospective investor, or evidence of a platform like Find), and how the money will be used. It takes HMRC several weeks; more if they have questions.
An accountant or solicitor who does SEIS/EIS applications regularly is worth the fee. The common failures are avoidable: a trade that looks like an excluded one, articles with a preference share class, a loan from the founder that looks like it will be repaid from the raise, and a "risk to capital" story that HMRC reads as an investment product rather than a trading business.
After the raise: the compliance statement
Once the shares are issued and you have been trading for four months (SEIS) or spent 70% of the money (EIS), you file a compliance statement — SEIS1 or EIS1. HMRC then issues the certificates (SEIS3/EIS3) that your investors need to claim relief. Founders who forget this step have investors who cannot claim, which is the last conversation you want. Put it in the diary on the day of completion.
What it changes on your listing
Set the instrument to SEIS/EIS shares. Put "SEIS eligible — advance assurance received" in the first line of your summary and on the raise. Investors on Find filter on it, and several will not open a listing without it.
This is a general description of the schemes as they stand in 2026, not tax advice. The limits and exclusions have exceptions and change at Budgets; confirm the current position with an adviser before you rely on it.
Questions founders ask
"Can I raise SEIS and EIS in the same round?"
Yes, and it is common: the first £250,000 under SEIS, the balance under EIS. The SEIS shares must be issued before (or at least not after) the EIS shares, so the sequencing in the share issue matters — your adviser will structure it. Investors often want to know which scheme their cheque falls under; say so in the listing.
"What stops the relief being withdrawn later?"
The shares must be held three years; the company must stay a qualifying trade and not be taken over or wound up in that time; the money must be spent on growth within the limit; and the investor must not become connected. Buy-backs, dividends funded by the raise, and a change of trade are the usual ways relief is lost. Tell your accountant before you do anything unusual with the company in the three years after the round.
"Our trade is partly excluded. Does that kill it?"
Not necessarily. The test is whether excluded activities are a "substantial" part — HMRC's working rule is around 20% — of the trade as a whole. A software business that also earns a little commission from introductions is usually fine; a business that is mostly property with a software front is not. Ask for advance assurance and let HMRC say.