UK SEIS and EIS explained: tax relief for startups and the investors who back them

In the UK, many first investment rounds are shaped by two tax schemes. SEIS and EIS give the people who invest in your company generous tax relief, which makes angels far more willing to write a small cheque into a risky young company. For a founder, the schemes are not money from the government. They are a reason an investor says yes. This guide sets out the company side: who qualifies, the limits and how to prepare.

• SEIS / EIS Tax ReliefInvestors get up to 50% income tax reliefGov. scheme · HMRC · United Kingdom

SEIS and EIS in one minute

• SEIS (Seed Enterprise Investment Scheme) is for the smallest and youngest companies. Investors in qualifying shares can get tax relief at a high rate.
• EIS (Enterprise Investment Scheme) is for growing companies that are bigger or older than SEIS allows. Income tax relief for investors is 30%, and that is unchanged.

A company can use SEIS first and EIS later, but it generally cannot have taken EIS or venture capital trust money before using SEIS.

SEIS: what the gov.uk page says

For the company, HMRC's guidance sets these limits:

• Maximum raise: GBP 250,000 through SEIS, including other de minimis state aid received in the 3 years up to and including the investment date.
• Gross assets: no more than GBP 350,000 for the company and its subsidiaries when the shares are issued.
• Employees: fewer than 25 full-time equivalent employees in total when the shares are issued.
• Other conditions: established in the UK, not listed on a recognised stock exchange, not a partner in a partnership, and no previous EIS or VCT investment.

Investor reliefs are set out in separate HMRC guidance, and the investor-side rules (income tax relief percentage, the annual SEIS limit per investor) are for the investor to check. The company age limit is also not on that page: SEIS is for young companies, generally those that started trading in the last 3 years, so check the HMRC guidance for your own dates.

You must spend the money within 3 years of the share issue. You send form SEIS1 (the compliance statement) only after the company has either traded for at least 4 months or spent at least 70% of the amount raised. The scheme rules must be followed for at least 3 years after the investment, or investors' relief can be withdrawn.

EIS: the 2026 changes

Government and professional guidance describes new EIS limits for shares issued from 6 April 2026. Check the policy paper on gov.uk for the exact conditions:

• Annual investment limit: GBP 10 million for most companies and GBP 20 million for knowledge-intensive companies in any 12-month period.
• Lifetime limit: GBP 24 million for most companies and GBP 40 million for knowledge-intensive companies.
• Gross assets: up to GBP 30 million before the share issue and GBP 35 million after.
• Income tax relief: 30% for EIS investors. The cut from 30% to 20% applies only to venture capital trusts.

Third-party guidance says an EIS company is generally within 7 years of its first commercial sale (10 years if knowledge-intensive) and under a set headcount, which differs between sources. Confirm both with HMRC's venture capital schemes manual before relying on them.

Advance assurance

Advance assurance is optional. You ask HMRC whether your share issue is likely to qualify before you raise. If you have it, you give HMRC copies of any documents that have changed since. If not, you supply the business plan, financial forecasts, latest accounts and the memorandum and articles of association with your compliance statement.

Investors often ask for it, so apply early. A clear business plan, a clean cap table and articles that fit the scheme save weeks.

Mistakes that cost a round

• Raising before you check the limits. Assets or headcount over the line when the shares are issued can disqualify the issue.
• Giving investors special rights that break the rules. Terms such as certain preferential rights or guaranteed returns can disqualify the shares.
• Spending too slowly or on the wrong thing. The money must go into the qualifying trade within the time allowed.
• Skipping the paperwork. Compliance statements need to be filed on time, or investors cannot claim.

Take advice from an accountant or solicitor who has done SEIS and EIS rounds. This guide is general information, not tax advice.

Related UK support

R&D tax relief is the other big UK tax lever: see UK R&D tax relief explained. Grants and loans are in startup credits in Europe.

• R&D Tax Relief (merged scheme)Up to ~27% of qualifying R&D spendGov. scheme · HMRC · United Kingdom
• Innovate UK CompetitionsGrants from £25k to £2M+Grant · UK Research and Innovation · United Kingdom
• Start Up Loans£500–£25,000 per founder at 7.5% fixed (up to £100k per business)Gov. scheme · British Business Bank · United Kingdom

Sources

• HMRC: apply to use SEIS
• Policy paper: EIS and VCT changes

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