SEIS & EIS Explained
The UK's most generous tax relief schemes for startup investors. Everything founders and angels need to know about SEIS and EIS — how they work, who qualifies, and why they matter.
What is SEIS?
The Seed Enterprise Investment Scheme (SEIS) is a UK government programme designed to encourage investment into early-stage startups. It offers the most generous tax reliefs of any UK investment scheme, making it the cornerstone of angel investing in Britain.
Under SEIS, individual investors can claim 50% income tax relief on investments up to £200,000 per tax year. That means investing £100,000 into a SEIS-qualifying company reduces your income tax bill by £50,000 in that year.
The benefits don't stop there. If you hold the shares for at least three years, any gains are completely exempt from Capital Gains Tax. And if you reinvest capital gains from another asset into SEIS shares, 50% of the reinvested gain is also exempt from CGT.
Companies can raise up to £250,000 in total under SEIS. This makes it ideal for pre-seed and seed rounds where founders need initial capital to validate their idea, build an MVP, or get to first revenue.
What is EIS?
The Enterprise Investment Scheme (EIS) is SEIS's bigger sibling. It targets slightly more established companies and allows significantly larger raises — up to £5M per year and £12M over the company's lifetime.
Investors receive 30% income tax relief on investments up to £2,000,000 per tax year (doubled from £1M since April 2023, provided the excess above £1M goes into knowledge-intensive companies). Shares must be held for a minimum of three years.
Like SEIS, gains on EIS shares held for 3+ years are exempt from Capital Gains Tax. EIS also offers CGT deferral relief — capital gains from other assets can be deferred by reinvesting them into EIS-qualifying shares. The deferred gain only becomes payable when the EIS shares are sold.
If the company fails, EIS investors can claim loss relief against their income tax, significantly reducing the downside risk. Combined with the initial 30% relief, the effective exposure on a total loss is around 53.5p for every £1 invested.
SEIS vs EIS — Key Differences
| Feature | SEIS | EIS |
|---|---|---|
| Full Name | Seed Enterprise Investment Scheme | Enterprise Investment Scheme |
| Income Tax Relief | 50% | 30% |
| Max Investment (per company) | £250,000 lifetime | £5M per year (£12M lifetime) |
| Max Investor Claim (per tax year) | £200,000 | £2,000,000 |
| Capital Gains Tax Exemption | 100% exempt (if held 3+ years) | 100% exempt (if held 3+ years) |
| Loss Relief | Yes — offset against income tax | Yes — offset against income tax |
| CGT Reinvestment Relief | 50% of gains reinvested are exempt | Gains deferred while EIS shares held |
| Company Age Limit | Less than 3 years old | Less than 7 years (or 10 for knowledge-intensive) |
| Company Gross Assets | Under £350,000 | Under £15M before / £16M after investment |
| Employee Limit | Fewer than 25 full-time employees | Fewer than 250 full-time employees |
| Minimum Holding Period | 3 years | 3 years |
Who Qualifies?
Not every company can raise under SEIS or EIS. HMRC sets strict criteria to ensure the schemes support genuine early-stage businesses. Here are the main requirements:
Company Requirements
- ✓UK-based with a permanent establishment
- ✓Carrying on a qualifying trade (not property, finance, or legal)
- ✓SEIS: trading for less than 3 years, gross assets under £350K
- ✓EIS: trading for less than 7 years (10 for knowledge-intensive), gross assets under £15M
- ✓Not listed on a recognised stock exchange
Investor Requirements
- ✓Must be a UK taxpayer (income tax liability required)
- ✓Cannot hold more than 30% of the company's shares
- ✓Cannot be an employee (but can be a paid director)
- ✓Must subscribe for new shares (not buy existing ones)
- ✓Must hold shares for at least 3 years to retain relief
How Angel Investors Use SEIS/EIS
SEIS and EIS are the backbone of the UK angel investing ecosystem. Without these schemes, the economics of early-stage investing would be dramatically worse — and many startups would struggle to raise their first round.
Consider a typical angel investment of £50,000 under SEIS. The investor immediately claims £25,000 back through income tax relief (50%), reducing their effective exposure to £25,000. If the startup succeeds and they sell after 3 years, any gains are CGT-free. If it fails entirely, loss relief means they can recover a further portion of the £25,000 remaining exposure against income tax.
This asymmetric risk profile is why serial angels often exclusively invest in SEIS/EIS-qualifying deals. It's also why having advance assurance from HMRC is essentially a prerequisite for closing an angel round in the UK.
Many experienced angels build a portfolio approach: investing £10K–£50K across 10–20 companies per year, knowing that the tax relief cushion means even a high failure rate can produce attractive net returns if one or two investments succeed.
Finding SEIS/EIS Angel Investors
If you're a founder raising a SEIS or EIS round, finding the right investors is half the battle. You want angels who actively invest at your stage, understand SEIS/EIS mechanics, and ideally have experience in your sector.
BackerIQ is built specifically for this. We analyse Companies House filings — officer appointments, PSC data, and SH01 share allotments — to identify individuals who are directors or shareholders across multiple early-stage companies. These are the hallmarks of serial SEIS/EIS investors.
Every investor in our database is scored on portfolio size, success rate (active vs dissolved companies), investment recency, and sector concentration. You can search investors by sector, location, and activity level, or browse our investor rankings to find the UK's most active angels.
Our sector analysis breaks down which industries attract the most angel investment, helping you understand where the money is flowing and which investors are concentrated in your space.
Frequently asked questions
Can a company raise under both SEIS and EIS?
Yes. A company can raise up to £250,000 under SEIS first, then move on to EIS for further rounds. Many startups use SEIS for their initial pre-seed/seed round, then EIS for follow-on funding. The SEIS round must be completed before or at the same time as the EIS round — you cannot go back to SEIS after raising EIS money.
Do I need advance assurance before raising SEIS/EIS?
Advance assurance is not legally required, but it is strongly recommended. It gives investors confidence that HMRC has reviewed your company and confirmed it qualifies for the scheme. Most experienced angel investors will ask to see your advance assurance letter before committing. You apply through HMRC’s online portal and it typically takes 4–6 weeks.
What happens if the startup fails?
This is one of the biggest advantages of SEIS/EIS. If the company fails, the investor can claim loss relief. Combined with the initial income tax relief, a 50% SEIS investor who loses their entire investment can recover up to 86.5p of every £1 invested through tax reliefs. For EIS at 30% relief, the effective loss is around 53.5p per £1. This downside protection is a major reason angels favour SEIS/EIS deals.
Can overseas investors claim SEIS/EIS relief?
Only UK taxpayers can claim SEIS/EIS income tax relief. The investor must have a UK income tax liability to offset the relief against. However, non-UK investors can still invest in SEIS/EIS-qualifying companies — they just won’t receive the tax benefits. The company itself must be UK-based with a permanent establishment in the UK.
How do I find angel investors who actively invest through SEIS/EIS?
BackerIQ tracks angel investors who appear as directors or shareholders across multiple early-stage UK companies — the profile of a typical SEIS/EIS investor. You can search by sector, investment history, and portfolio size to find investors who are actively backing startups at the SEIS/EIS stage. Companies House filings reveal which companies have issued shares (SH01 filings), and BackerIQ cross-references these to identify serial angels.
What’s the difference between SEIS/EIS and VCTs?
SEIS and EIS involve direct investment into specific companies, giving the investor equity and tax relief. Venture Capital Trusts (VCTs) are listed funds that invest in a portfolio of qualifying companies on the investor’s behalf. VCTs offer 30% income tax relief and tax-free dividends, but the investor doesn’t choose which companies to back. Angel investors who want hands-on involvement and specific deal selection typically prefer SEIS/EIS over VCTs.
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