top of page

The Ultimate Guide to SEIS and EIS

For small or medium-sized businesses, investment plays a key role in growth and success. The problem is, investing in non-established companies can be risky.

To tackle this reluctance to invest, the government created two incentives: the Seed Enterprise Investment Scheme (SEIS), and the Enterprise Investment Scheme (EIS). These schemes provide tax relief to investors who take the risk of investing in smaller, early-stage companies.

Effectively, these schemes act as a safety net for investors, and provide companies with the funding required to expand their business and innovate further.

In this blog, we’ll take a closer look at how these incentives work and what benefits they offer.

The Seed Enterprise Investment Scheme (SEIS)

The Seed Enterprise Investment Scheme (SEIS) was set up to support early-stage businesses. It seeks to incentivise investors into funding these businesses by offering them hefty tax deductions.

Under SEIS, individuals can invest up to £200,000 in a company, receiving 50% Income Tax relief in return. Along with the income tax relief, investors are also exempt from Capital Gains Tax on any sale of shares profits after three years.

Any business that is SEIS approved instantly becomes more attractive to investors – it minimises the risk and increases their value. In fact, early-stage businesses are often more likely to have an ROI of double or triple what was invested, so it’s a hugely valuable asset for any young business seeking investment.

The Enterprise Investment Scheme (EIS)

The Enterprise Investment Scheme (EIS) focuses on better established, slightly larger businesses who are seeking investment.

As there’s less of a risk under this scheme, up to £1 million can be invested (per financial year), but the tax relief will be 30% rather than the 50% offered by SEIS.

After three years, investors are exempt from Capital Gains Tax – as is the case for SEIS. For both schemes, there is also no Inheritance Tax to pay on shares held for at least two years. If the shares are sold at a loss, the loss may be offset against their Capital Gains Tax to mitigate the damage.

Uses of S/EIS investment

The funds received by eligible businesses must be used for ‘qualifying business activity’, which is:

  • A qualifying trade

  • OR: Preparing to carry out a qualifying trade within the next two years

  • Research and development (R&D) that will lead to a qualified trade

The money raised also needs to:

  • Be spent within 3 years of investment - if it takes more than two years, the money must be spent by the date you started trading

  • Not be used to buy all/part of another business

  • Pose a risk of capital loss for the investor

  • Be used to grow or develop your business

How much can businesses raise?

Under SEIS, businesses can earn up to £250,000, and under EIS, this goes up to £12 million.

However, if your business has received any de minimis state aid in the past three years, the sum of that aid would count toward the investment limit, reducing the amount of investment you can receive.

If eligible for both SEIS and EIS, the SEIS has to be claimed first, and you must wait at least one day between the shares.

What investors need to know

Under SEIS, a maximum of £200,000 can be invested per financial year. For EIS, the limit is £1 million.

Investors cannot be in possession of over 30% of the company’s shares, and mustn’t be associated with the company in terms of employment – this is heavily regulated.

Once these shares have been issued, the investor can become a Director of the company, but this must happen after.

S/EIS Advance Assurance

Investors may want proof that your company qualifies for S/EIS funding. The best way to get this proof is by obtaining Advanced Assurance from HMRC.

When applying for Advanced Assurance, you provide details of your proposed investor, your business plan (including financial forecasts), a copy of your latest accounts, a cover letter, and much more.

This detailed information paints a solid picture of your eligibility for S/EIS funding, and gives your business the stamp of approval needed to attract investors.

If you want Advanced Assurance, it’s important to make sure everything is done correctly. That’s why experienced accountants handle the process for you, helping you to get the assurance as quickly and smoothly as possible.


Here at Jump Accounting, we offer personalised accounting services that help start-ups to build, grow, and scale. We provide expert advice, comprehensive accounting services, and S/EIS services - including S/EIS Advanced Assurance!

If you’d like to find out more about what we offer, take a look at our services.


bottom of page