SEIS vs EIS: which investment scheme is right for your startup?
The Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) give investors generous tax relief for backing young UK companies. That makes your company more attractive to angel investors. This guide explains how the two schemes differ, which one fits your stage, and how to apply.
SEIS and EIS at a glance
SEIS | EIS | |
|---|---|---|
Who it is for | Very early-stage companies | Early-stage and growing companies |
Investor income tax relief | 50% | 30% |
Investor annual limit | £200,000 | £1 million (£2 million if at least £1 million is in knowledge-intensive companies) |
Company can raise | Up to £250,000 in total | Up to £10 million a year and £24 million in total (higher for knowledge-intensive companies) |
Company age | Trading for less than 3 years | Usually within 7 years of first commercial sale (10 for knowledge-intensive companies) |
Gross assets before investment | Up to £350,000 | Up to £30 million |
Employees | Fewer than 25 | Fewer than 250 (500 for knowledge-intensive companies) |
Minimum holding period for investors | 3 years | 3 years |
Limits shown are those applying from 6 April 2026. The detailed conditions are set out in HMRC's guidance.
Which scheme should you use?
Most startups use SEIS first, for their earliest money, because the 50% relief is especially attractive to angels. Once the SEIS limit is used up, the company can move on to EIS for later rounds. Many companies use both in the same round, issuing SEIS shares first and EIS shares afterwards, but the order and timing matter, so plan it before any money arrives.
What investors get
- **Income tax relief** on the amount invested: 50% under SEIS and 30% under EIS
- **No capital gains tax** on a gain when the shares are sold, provided the conditions are met
- **Loss relief** if the company fails
- **Capital gains reinvestment or deferral relief** in some circumstances
Investors can only claim once the company has submitted a compliance statement and issued them a certificate.
How to apply
1. **Advance assurance.** Most companies ask HMRC to confirm in advance that the company and the planned share issue are likely to qualify. Investors usually expect this before they commit.
2. **Issue the shares.** The shares must be full-risk ordinary shares, paid for in cash, and issued before the money is used.
3. **Compliance statement.** After the shares are issued and the conditions are met, the company submits an SEIS1 or EIS1 compliance statement to HMRC.
4. **Investor certificates.** Once HMRC authorises the claim, the company issues SEIS3 or EIS3 certificates so investors can claim their relief.
Common mistakes
- Issuing shares before advance assurance is in place, or before planning the SEIS/EIS order
- Share rights, such as preferences, that disqualify the shares
- Using the money for a purpose that does not qualify
- Changes during the three-year period, such as a new share class or a change of trade, that put investors' relief at risk
How Elm can help
We prepare advance assurance applications, compliance statements and investor certificates, and flag anything that could affect eligibility during the qualifying period. See our [support for founders](/founders) and [company secretarial](/company-secretarial) services.
For HMRC's own guidance, see [Seed Enterprise Investment Scheme](https://www.gov.uk/guidance/venture-capital-schemes-apply-to-use-the-seed-enterprise-investment-scheme) and [Enterprise Investment Scheme](https://www.gov.uk/guidance/venture-capital-schemes-apply-for-the-enterprise-investment-scheme) on GOV.UK.