Unlocking the Benefits of SEIS and EIS: A Guide for Startups

In the high-stakes world of early-stage fundraising, UK founders have a distinct advantage in their toolkit: government-backed tax relief schemes that de-risk investment and unlock capital. The Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) are powerful mechanisms to help you raise equity funding by making your startup significantly more attractive to investors. The schemes are popular too; in 2022/2023, 1,815 startups raised money under the SEIS scheme with a further 4,205 companies making use of the EIS scheme.

This guide breaks down what these schemes offer – and how you can use them strategically to scale your business.

What is the Seed Enterprise Investment Scheme (SEIS)?

SEIS is designed for very early-stage startups. If your company is under three years old, has fewer than 25 employees, and holds gross assets of less than £350,000, you could be eligible to raise up to £250,000 under SEIS.

The standout benefit? Investors can claim 50% income tax relief on investments up to £200,000 per tax year. In addition:

• If shares are held for at least three years, any gains are exempt from Capital Gains Tax (CGT)
• If the investment results in a loss, investors can claim loss relief against other income or gains, softening downside risk

This makes SEIS particularly appealing to angel investors backing businesses at their most formative stage.

What is the Enterprise Investment Scheme (EIS)?

EIS is for more developed, growth-stage startups – companies up to seven years old with fewer than 250 employees and gross assets under £15 million.

You can raise up to £12 million in total through EIS (capped at £5 million per year). Investors benefit from:

• 30% income tax relief on investments up to £1 million per year (or £2 million for knowledge-intensive companies)
• No CGT on share gains held for at least three years
• The same loss relief provision if the business underperforms

EIS allows you to unlock larger cheques while still giving investors meaningful downside protection and tax benefits.

SEIS vs EIS – Key Differences and Strategic Use

Think of SEIS as your foot in the door with early believers. Once traction is proven, EIS becomes the vehicle to scale.

How These Schemes Help Founders

1. Investor Appeal

SEIS and EIS reduce the risk profile for investors – especially angels, syndicates, and high-net-worth individuals. This widens your investor pool and helps you close rounds faster.

2. Structured Follow-On Path

SEIS often serves as a gateway to EIS. Once you’ve hit your SEIS limit, transitioning to EIS keeps your funding journey continuous and strategically staged.

3. Credibility by Design

Eligibility requires meeting HMRC’s conditions, which adds a layer of validation for investors. It signals that your business has passed a threshold of government-approved compliance.

4. Tax-Free Upside, Minimised Downside

Not only are gains tax-free if shares are held for 3+ years, but losses can be offset, making even riskier investments more palatable for your backers.

How to Qualify and Apply

• SEIS eligibility: UK-based, under 3 years old, <25 employees, <£350k in assets
• EIS eligibility: UK-based, up to 7 years old, <250 employees, <£15m in assets

To access either scheme, apply for Advance Assurance through HMRC. This gives investors confidence that your startup is compliant before they commit capital. The process includes:

• Business plan and financial forecasts
• Cap table and investor structure
• Description of your trade and activities

Pro tip: Many investors won't invest without Advance Assurance in place – make this a priority early in your round planning.

Why Founders Should Prioritise SEIS/EIS

In a fragmented, competitive fundraising environment, structuring your round to qualify for SEIS or EIS is one of the most effective tools to make your business stand out. It not only de-risks the deal for investors but gives you a narrative advantage in the room: “We’ve done the work, and the government backs this deal structure.”

If you're a UK founder raising equity capital – particularly at pre-seed or seed – SEIS and EIS aren't just nice-to-haves. They're fundamental tools in your capital-raising strategy. Structure your round right, secure Advance Assurance early, and give investors every reason to say yes.

References & Resources:

1. Enterprise Investment Scheme, Seed Enterprise Investment Scheme and Social Investment Tax Relief statistics: 2024 | https://www.gov.uk/government/statistics/enterprise-investment-scheme-seed-enterprise-investment-scheme-and-social-investment-tax-relief-may-2024/enterprise-investment-scheme-seed-enterprise-investment-scheme-and-social-investment-tax-relief-statistics-2024‍
2. Apply to use the Seed Enterprise Investment Scheme to raise money for your company | https://www.gov.uk/guidance/venture-capital-schemes-apply-to-use-the-seed-enterprise-investment-scheme‍
3. Apply to use the Enterprise Investment Scheme to raise money for your company | https://www.gov.uk/guidance/venture-capital-schemes-apply-for-the-enterprise-investment-scheme‍
4. Apply for advance assurance on a venture capital scheme | https://www.gov.uk/guidance/venture-capital-schemes-apply-for-advance-assurance