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Changes to the SEIS initiative from April 2023

As of 15 March 2023, these planned changes were officially confirmed in a policy paper released alongside the 2023 Spring Budget. Nothing new was added to the scheme in the paper, only detailing the financial impact on the Exchequer.

What is the Seed Enterprise Investment Scheme, or SEIS?

The Seed Enterprise Investment Scheme (SEIS) is a UK government initiative, which focuses on helping young companies scale. Its purpose is to encourage funding bodies to provide them with capital by rewarding private investors with a substantial tax deduction.

This financial incentive acts as a safety net for providing ‘high-risk’ companies with investment.

There is a second branch of this scheme, called the Enterprise Investment Scheme (EIS), which instead focuses on SMEs that are more established. The EIS is not undergoing change in April 2023, so we won’t delve into that scheme here. If you’d like to learn more about EIS funding, check out our R&D Tax Credit partner’s blog - SEIS and EIS: The schemes that attract investment for businesses.

Here, we’ll explain how SEIS currently works, why we’re welcoming change, and the reform being implemented from April 2023. In addition, we’ll run through how to take advantage of the new rules to start raising up to £250,000 immediately, as well as legal pitfalls to look out for.

How does SEIS currently work?

The Seed Enterprise Investment Scheme (SEIS) motivates funding bodies to invest in early-stage businesses because the scheme rewards private investors with a substantial tax deduction.

At present, and until April 2023, SEIS works as follows:

  • A company applies for SEIS Advance Assurance, which is validation from HMRC that they qualify for SEIS funding, and that investors will receive subsequent tax breaks.

  • The funding body can invest up to £100,000 (per financial year) and in turn receive a 50% income tax deduction.

  • After three years, the investor then gains exemption from capital gains tax on any profits that arise from the sale of shares.

So, SEIS-approved businesses suddenly lose half of the capital risk that comes with investing in them whilst retaining the huge ROI potential.

It’s easy to see why this is a game-changer for potential investors, and why SEIS makes up a large percentage of early-stage funds in the UK - in 2020-2021, 2,065 companies raised a total of £175 million of funds under the SEIS scheme.

Although companies can raise up to £12M under EIS once they’ve exhausted their £150K SEIS fund, SEIS offers more generous benefits to investors – a 50% deduction of their investment amount against their income tax, rather than EIS’ 30%.

If you think your business could benefit from SEIS (or EIS) funding, Jump Accounting can help you take the first step. Our SEIS/EIS Advance Assurance service secures ‘proof’ from HMRC that investors in your company will be rewarded with the above financial incentives.

Entering your next funding pitch armed with SEIS/EIS Advance Assurance could be the difference between success and failure. Our Chartered Accountants can complete your application, checklist, and cover letter, securing Advance Assurance on your behalf.

Why are things changing?

The SEIS scheme was introduced back in 2012 – a time when raising £150K in a first round was sufficient to get the ball rolling for most startups. But we all know times have changed, and £150k doesn’t get you nearly as much as it did just 10 years ago.

Aside from this problem, there exists the issue that the £150k limit entailed first round company valuations in the UK that weren’t increasing in line with valuations in the US and elsewhere.

Data has shown that companies dilute on average 10% - 15% in an initial funding round, which gave rise to a pattern of companies raising £150K on pre-money valuations in the range of £850K to £1M.

Again, this sum was adequate for most back in 2012, but the financial landscape has since moved on, and so have the demands of fast-growing businesses.

What are the changes, and how will SEIS work from April 2023?

This month, in the September 2022 mini-budget, the UK government announced significant reforms to the SEIS initiative. The changes are as follows:

  • Companies can now raise £250,000 in SEIS – increasing from £150,000. This £100,000 increase in potential SEIS investments will enable businesses to extend their runway and address cashflow issues in several areas of their business.

  • Companies can raise SEIS within the first 3 years of trading – increasing from the current 2 years. This enables businesses to plan, budget and strategize for longer before meeting the deadline for SEIS investment, which in turn, should bring about more effective allocation of capital with a greater ROI.

  • Companies must have less than £350,000 in gross assets to be eligible to raise SEIS – increasing from the current £200,000.

  • One more change (this time from the perspective of the investor) is that they will be limited to investing a maximum of £200,000 per year under SEIS, which is double the £100,000 maximum that currently stands.

All in all, the SEIS initiative is becoming more lucrative and more inclusive for businesses in the UK. In addition, investors will be able to see greater return as they’ll be able to double their yearly cash injection.

Over the past decade, the scheme has proved extremely successful brainer for early-stage businesses with an appetite for growth. This reform will only make the Seed Enterprise Investment Scheme more appealing, and help the UK maintain its status as a hub for entrepreneurship.

Though April 2023 is just six months away, there is a possibility for businesses to utilise the reformed SEIS – and raise £250,000 - prior to this date.


Considering that SEIS conditions are applied on the date that the shares are issued, it is possible to raise SEIS investment now (up to £250,000) and then issue shares in six months when the SEIS rules officially change.

This can be facilitated by an Advanced Subscription Agreement (ASA). An ASA is an equity tool whereby investors subscribe for shares in your next funding round in exchange for cash up front.

One condition of the ASA is that the investment must convert into shares in no more than six months from the date of the agreement. So, to raise the new SEIS maximum of £250,000, you can’t receive the funds or the ASA prior to the 6th October 2022.

Whilst ASAs are entirely compatible with SEIS and EIS fundraising, it’s strongly advised that companies use a legal professional to complete your Advanced Subscription Agreement, ensuring no important conditions are omitted.

Jump Accounting has an ever-growing portfolio of partners, providing all-round support to growing businesses. Legal issues are major aspect of scaling safely and effectively, and we’re well-equipped to direct our clients to the best law firms for their size and stage.

It’s widely regarded in the industry that DIY templates for your ASA (or other legal documents) are no match for engaging an experienced solicitor – no matter how budget-friendly it appears. Insufficient ASA contracts may leave you picking agreements apart later, and potentially have investors withdraw from deals.

That covers everything you need to know regarding the changes being made to the Seed Enterprise Investment Scheme (SEIS), from April 2023!

If the reforms mentioned here make SEIS funding more attractive to you, or if they’re due to make your currently ineligible business eligible, remember to keep a date in your diary! Or, to avoid the rush of applications in April of next year, get your SEIS Advance Assurance underway today.


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