Fintech companies can qualify for SEIS and EIS — but not all do. The schemes exclude trades that consist substantially of financial activities: banking, insurance, money-lending, debt factoring, hire-purchase financing and similar. In practice, a fintech that earns fees for providing software or processing services generally qualifies; a fintech that lends, underwrites or deals as principal generally doesn’t. “Substantially” means HMRC looks at whether excluded activities exceed roughly 20% of the trade. Because fintech sits closer to this line than any other startup sector, HMRC advance assurance before raising is essential.
Why fintech is the hardest sector to call
For 2026/27, SEIS gives investors 50% income tax relief (with a £250,000 company lifetime raise limit) and EIS gives 30% relief. Those reliefs are often the difference between an angel round closing and not closing — which is why the qualifying-trade question matters more for fintech founders than almost anyone else.
The legislation excludes trades consisting substantially of:
- Banking, insurance, money-lending, debt factoring and hire-purchase financing
- “Other financial activities” — a deliberately broad catch-all
- Dealing in shares, securities, commodities or futures
The problem: modern fintech business models don’t map neatly onto categories written for a pre-fintech economy. The same product can be structured as excluded lending or as qualifying software, depending on where the balance-sheet risk sits.
How the line falls in practice
The key question is whether your company earns money by providing a technology service for a fee, or by taking financial positions as principal. Fee-based software and processing income points to a qualifying trade; interest, underwriting profit and dealing spreads point to an excluded one.
| Business model | Likely position | Why |
|---|---|---|
| SaaS sold to banks/insurers | Generally qualifies | The trade is software, not financial activity — the customer’s industry is irrelevant |
| Payments / processing platform | Often qualifies | Fee-for-service processing; but structure matters — flag for advance assurance |
| Balance-sheet lender | Generally excluded | Money-lending is a named excluded activity |
| Lending marketplace (no principal risk) | Grey area | Platform fees may qualify; anything resembling lending as principal won’t — structure and advance assurance critical |
| Insurtech carrying risk | Generally excluded | Insurance is a named excluded activity |
| Insurtech software (no risk carried) | Generally qualifies | Software supplied to insurers, not insurance itself |
| Crypto trading / dealing | Generally excluded | Dealing in commodities, currencies or securities is excluded |
Every row is a starting position, not a conclusion — HMRC assesses the actual trade, and hybrid models are judged on the mix.
The 20% “substantial” test
A company doesn’t fail just because some excluded activity exists in the mix. The test is whether excluded activities form a substantial part of the trade — HMRC’s published approach treats “substantial” as more than about 20%, measured across indicators like turnover, assets and management time, while noting a percentage test won’t always give a fair result.
A payments platform earning modest interest on float alongside dominant processing fees is a very different case from one where interest is the business model. The mix needs monitoring as the company grows: a qualifying trade at seed can drift into excluded territory by Series A.
The other conditions still apply
The trade test is the fintech-specific hurdle, but the standard conditions sit alongside it. For 2026/27:
- SEIS: gross assets ≤ £350,000 before the share issue, fewer than 25 employees, £250,000 company lifetime raise limit
- EIS: fewer than 250 full-time-equivalent employees (500 for knowledge-intensive companies), measured across the group; annual investment limit £10m (£20m KIC) and lifetime limit £24m (£40m KIC) under the limits that changed from 6 April 2026
- Funds must be used for a qualifying business activity within the statutory windows, and the risk-to-capital condition applies to every raise
Many fintechs qualify as knowledge-intensive companies through R&D spend — which raises the EIS limits significantly. If you’re claiming R&D tax relief, the same evidence often supports KIC status; see our R&D tax relief service.
Advance assurance — answer the question before investors ask it
HMRC advance assurance is a written opinion, based on the facts you present, that a proposed share issue is likely to qualify. For fintech it does two jobs: it resolves the excluded-activities question before you raise, and it gives investors the comfort they increasingly insist on. Advance assurance is not a guarantee — relief is only confirmed when the compliance statement is processed after the raise, and assurance obtained on one set of facts doesn’t survive a change of business model.
AccTek prepares and submits advance assurance applications with the trade analysis HMRC needs to see — revenue-line mapping, the substantial-activities assessment, and the business-plan narrative that answers the financial-activities question head-on. Start with our SEIS advance assurance service or the step-by-step application guide.
SEIS and EIS for fintech FAQs
Do fintech companies qualify for SEIS or EIS?
Many do, but eligibility turns on the trade. SEIS and EIS exclude trades consisting substantially of financial activities such as banking, insurance, money-lending and dealing. Fintechs earning fees for software or processing services generally qualify; fintechs lending, underwriting or dealing as principal generally don't. HMRC advance assurance is the reliable way to confirm the position before raising.
Is a payments company excluded from SEIS and EIS?
Not automatically. Fee-based payment processing is a technology service rather than a named excluded activity, and payments companies do obtain advance assurance. But structure matters — holding client funds, earning material interest on balances, or extending credit can pull the trade towards the exclusion, so the position should be confirmed with HMRC before raising.
What counts as a substantial excluded activity?
HMRC's published approach treats 'substantial' as more than around 20% of the trade, judged in the round across measures like turnover, assets and management time — though HMRC notes a percentage test won't always give a fair result. A small amount of excluded activity within a mainly qualifying trade doesn't disqualify the company by itself.
Can a lending fintech ever qualify for SEIS or EIS?
Lending as principal is a named excluded activity, so a balance-sheet lender is generally out. A marketplace or software model where the company earns platform fees and carries no principal lending risk may qualify, but this is exactly the fact pattern HMRC scrutinises — advance assurance on the specific structure is essential, and restructuring purely to engineer relief carries its own risks.
Does advance assurance guarantee my investors will get relief?
No. Advance assurance is HMRC's opinion on the facts presented and is not binding; relief is confirmed only when the company's compliance statement is processed after the shares are issued, and a change in the business model can invalidate an earlier assurance. It remains the strongest comfort available before a raise.
Godwin Pinto ACA (ICAI) is the founder of AccTek and a member of ICPA, with 20+ years of experience in accounting and tax for contractors, startups and SMEs. Previously at PwC.
Official guidance: apply for SEIS and EIS on GOV.UK; HMRC’s approach to excluded activities and the “substantial part” test is set out in its Venture Capital Schemes Manual. AccTek Ltd is an independent accountancy practice and is not affiliated with HMRC or GOV.UK. This guide is general information based on 2026/27 rules, not advice on your company’s specific position.
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