SEIS and EIS: UK investor tax reliefs for seed rounds

The Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) are UK tax reliefs for individuals who buy new shares in small, unlisted, higher-risk companies. The company receives no money from the government. The relief belongs to the investor, but it only exists if the company meets HMRC's conditions, and keeps meeting them for at least three years. Because many UK angels will only invest if relief is available, these schemes shape how UK seed rounds are structured: what kind of shares are issued, in what order, and what the company may do with the money.

Company limits

The table compares the main company conditions as stated in HMRC's guidance on GOV.UK. The EIS limits shown took effect from 6 April 2026; older guides quoting lower EIS limits are out of date.

Condition	SEIS	EIS	EIS, knowledge-intensive company (KIC)
Maximum the company can raise	£250,000 in total	£10 million in any 12 months; £24 million lifetime	£20 million in any 12 months; £40 million lifetime
Gross assets	No more than £350,000 when shares are issued	No more than £30 million before the issue and £35 million immediately after	As EIS
Employees (full-time equivalent)	Fewer than 25	Fewer than 250	Fewer than 500
Age	The trade must not have been carried on for more than 3 years	Investment within 7 years of the first commercial sale (with exceptions)	Up to 10 years, measured from one of the dates HMRC allows
Time to spend the money	Within 3 years of the share issue	Within 2 years of the investment (or of starting to trade, if later)	As EIS

The SEIS £250,000 limit includes other de minimis state aid received in the three years up to the investment, and counts toward later scheme limits. The EIS limits include money raised under SEIS, venture capital trusts and certain other state aid. "Specified companies" (registered office in Northern Ireland and trading in goods or the wholesale electricity market) have lower EIS limits. Source: GOV.UK, checked 26 October 2026.

Both schemes also require that the company:

carries on a qualifying trade (certain activities are excluded) or is preparing to, or does qualifying research and development;
is not listed on a recognized stock exchange and has no arrangements to become listed;
is not controlled by another company, and controls only qualifying subsidiaries. For SEIS, the company must not have been controlled by another company at any time since incorporation;
meets the risk-to-capital condition: it intends to grow and develop its trade over the long term, and the investment carries a real risk that investors lose more capital than they gain as a net return;
has a permanent establishment in the UK (EIS) or is established in the UK (SEIS).

What investors get

Relief	SEIS	EIS
Income tax relief	50% of the amount invested	30% of the amount invested
Maximum annual investment that qualifies	£200,000	£1 million, or £2 million if at least £1 million goes into KICs
Capital gains on the shares	Exempt when sold, if income tax relief was given and not withdrawn and the shares were held for the minimum period (at least 3 years)
Gains from other assets	Reinvestment relief: half of a gain reinvested in SEIS shares is exempt, on up to £200,000 invested (up to £100,000 of gains)	Deferral relief: a gain reinvested in EIS shares is deferred until the shares are sold or relief is lost
Losses	Share loss relief: a loss on disposal, net of income tax relief already given, can be set against income

Investors can claim income tax relief in the year they invest or carry it back to the previous tax year. They lose relief if they are "connected" with the company: broadly, if they or their associates (close family and business partners) are employees, or hold more than 30% of the shares, voting rights or rights to assets on a winding-up. Directors can claim SEIS relief. Under EIS, a director who is paid at the time of the share issue generally cannot claim, with defined exceptions. Founders who own most of the company will therefore usually not get relief on their own money.

The scheme conditions limit the instruments a UK seed round can use. HMRC requires the shares to be:

New ordinary shares, fully paid in cash when issued. The company must have a way to accept payment before the shares are issued.
Full-risk. They must not be redeemable and must carry no special rights to the company's assets. Limited preferential rights to dividends are allowed only if the dividend cannot accumulate and cannot be varied.
Free of protective arrangements. There must be no guarantee or other protection of the investment, no pre-arranged exit, no reciprocal investment and no tax-avoidance purpose.

The practical consequences: SEIS and EIS shares cannot carry the kind of liquidation preference attached to US-style preferred stock, because that is a special right to the company's assets. Instruments that delay the share issue, such as a US-style SAFE or a convertible note, need careful structuring, because relief attaches to shares that are newly issued and paid for in cash. Use a UK structure your adviser has confirmed works with the schemes.

SEIS must come before EIS

Order matters. HMRC's guidance says a company cannot use SEIS if it has already received investment under EIS or from a venture capital trust, and that once shares are issued under EIS the company cannot issue shares under SEIS. A company that wants both should issue its SEIS shares first.

In practice, advisers usually have the SEIS shares allotted in a separate, earlier share issue than any EIS shares, even when all the money arrives in the same round. Older guidance also required 70% of the SEIS money to be spent before EIS shares could be issued; HMRC's manual records that this requirement was withdrawn for shares issued on or after 6 April 2015.

Advance assurance and compliance statements

Advance assurance (optional). Apply to HMRC online before the round. If HMRC agrees, it confirms that the share issue is likely to qualify, which reassures investors. First-time applicants usually need to name their prospective investors. Advance assurance covers only the company conditions on the information given; it does not confirm that any investor qualifies and is not an endorsement.
Issue the shares. Investors pay in full, in cash, and the company issues the shares, SEIS first if both schemes are used.
Submit a compliance statement. Form SEIS1 or EIS1, one for each share issue. For SEIS, you can submit once the company has carried on its new qualifying trade for at least four months or has spent at least 70% of the money raised. For EIS, once the qualifying business activity has been carried on for four months, and within two years of that date or of the end of the tax year of issue, whichever is later.
Receive authorization. If HMRC agrees, it issues a letter of authorization with a unique investment reference and compliance certificates (SEIS3 or EIS3).
Give certificates to investors. Investors need the certificate and reference to claim relief through their tax return or a tax-code change.
Stay compliant for at least three years. Tell HMRC within 60 days if the company stops meeting the conditions.

Common pitfalls

Issuing SEIS and EIS shares in the wrong order, or issuing any EIS shares before the SEIS round is complete.
Giving SEIS or EIS investors preferential rights to assets, or redeemable shares, in the articles or a side letter.
Taking money before shares are issued without a structure your adviser has confirmed.
Spending the money on an excluded activity, or not spending it within the time limit.
Returning value to shareholders during the three-year period, or creating a "connection" for an investor by hiring them.
Promising relief in a pitch deck as if it were certain. Only HMRC decides, and only the investor claims.

Relief can make a UK round easier to fill, but it never replaces the company's own case for investment. See pre-seed for how these rounds usually fit together, and Innovate UK for grant funding.

Sources

Apply to use the Seed Enterprise Investment Scheme to raise money for your company, HM Revenue & Customs (GOV.UK). Open Government Licence v3.0.
Apply to use the Enterprise Investment Scheme to raise money for your company, HM Revenue & Customs (GOV.UK). Open Government Licence v3.0.
Use a venture capital scheme to raise money for your knowledge intensive company, HM Revenue & Customs (GOV.UK). Open Government Licence v3.0.
Tax relief for investors using venture capital schemes, HM Revenue & Customs (GOV.UK). Open Government Licence v3.0.
Apply for advance assurance on a venture capital scheme, HM Revenue & Customs (GOV.UK). Open Government Licence v3.0.
Venture Capital Schemes Manual VCM12040: spending of SEIS money, HM Revenue & Customs (GOV.UK). Open Government Licence v3.0.