SEIS and EIS for Startups — AccTek Accountants

Q: What is the difference between SEIS and EIS?

SEIS (Seed Enterprise Investment Scheme) targets the earliest-stage startups with 50% income tax relief for investors, a company lifetime fundraising cap of £500,000, and stricter qualifying conditions. EIS (Enterprise Investment Scheme) is for more established growth companies with 30% income tax relief, company annual limits of up to £10 million (from April 2026), and higher asset and employee thresholds.

Q: What changed for EIS from April 2026?

From 6 April 2026, the Finance Act 2026 doubled several EIS company limits. The annual investment limit increased from £5 million to £10 million (£20 million for knowledge-intensive companies). The lifetime limit rose from £12 million to £24 million (£40 million for KICs). Gross asset thresholds doubled to £30 million before and £35 million after investment. The employee limit increased to 500 for all companies.

What Are SEIS and EIS?

SEIS (Seed Enterprise Investment Scheme) and EIS (Enterprise Investment Scheme) are UK government schemes that give generous tax relief to individuals who invest in early-stage businesses. For founders, they are powerful tools for attracting angel investment and reducing the perceived risk of backing your startup.

SEIS targets the earliest-stage companies — typically pre-revenue or pre-product-market-fit — and offers investors 50% income tax relief on investments up to £200,000 per tax year. EIS is for more established growth companies and offers 30% income tax relief on investments up to £1 million per tax year.

Both schemes also provide capital gains tax benefits, loss relief if the company fails, and inheritance tax relief. For the right investor, SEIS and EIS fundamentally change the risk-reward profile of backing a startup.

SEIS vs EIS: Side-by-Side Comparison

Both schemes incentivise investment in UK startups, but they serve different stages and carry different limits. This table reflects the current 2026/27 rules including the April 2026 EIS changes.

	SEIS	EIS
Investor income tax relief	50%	30%
Investor annual limit	£200,000	£1 million (£2m for KICs)
Company lifetime cap	£500,000	£24 million (£40m for KICs)
Company annual cap	—	£10 million (£20m for KICs)
Gross assets limit	£350,000 before investment	£30m before / £35m after
Employee limit	Fewer than 25	Fewer than 500
Trading history	Less than 3 years	Less than 7 years (10 for KICs)
CGT relief on gains	Full exemption after 3 years	Full exemption after 3 years
CGT reinvestment relief	50% permanent exemption	Deferral (not exemption)
Loss relief	Yes	Yes
Directors can invest?	Yes (max 30% holding)	No (unless non-controlling)
Minimum hold period	3 years	3 years
Scheme expiry	No current sunset	April 2035

Founder tip

Most early-stage startups raise under SEIS first (up to £500,000), then move to EIS for larger rounds. You cannot use both schemes in the same accounting period for the same share issue — but you can use them sequentially as your company grows.

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SEIS and EIS Tax Relief: What Investors Actually Get

Understanding the full suite of reliefs helps you pitch more effectively to angel investors. Here’s the detail.

SEIS investor relief (the most generous in the UK)

50% income tax relief — Invest £50,000, get £25,000 off your income tax bill. The relief can be carried back to the previous tax year.
50% CGT reinvestment relief — Reinvest a capital gain into SEIS shares and 50% of that amount is permanently exempt from CGT. This is not a deferral — it’s a write-off.
CGT exemption on SEIS gains — Any profit on SEIS shares sold after three years is completely CGT-free.
Loss relief — If the company fails, the investor can offset their loss (net of income tax relief already received) against income tax or CGT.

EIS investor relief

30% income tax relief — Invest £100,000, reduce your income tax by £30,000. Can also be carried back one tax year.
CGT deferral — Gains from the sale of any asset can be deferred by reinvesting into EIS qualifying shares. The gain is deferred until the EIS shares are disposed of.
CGT exemption on EIS gains — Profits on EIS shares held for at least three years are CGT-free.
Loss relief — Same as SEIS — losses net of tax relief can be offset against income tax or CGT.
Inheritance tax relief — EIS shares qualify for Business Relief after two years, potentially removing them from the investor’s estate for IHT purposes.

Worked example — SEIS

An investor puts £100,000 into your SEIS-qualifying startup. They immediately claim £50,000 in income tax relief. If they reinvested a £100,000 capital gain to fund the investment, a further £50,000 of that gain is permanently exempt from CGT. Their effective net cost is just £25,000 for a £100,000 investment. That’s the kind of maths that gets angel investors excited.

Planning a fundraise? Get SEIS/EIS ready first.

We handle advance assurance, compliance statements and investor-ready financials — so your raise isn’t held up by paperwork.

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Does Your Startup Qualify for SEIS or EIS?

Both schemes have strict qualifying conditions. If your company doesn’t meet them at the time shares are issued, your investors lose their tax relief — which is why getting advance assurance from HMRC before you raise is critical.

SEIS company conditions

UK limited company carrying on (or preparing to carry on) a qualifying trade
Gross assets no more than £350,000 immediately before the share issue
Fewer than 25 full-time equivalent employees
Less than three years of trading history
Must not have previously raised funds under EIS or VCT
Lifetime SEIS fundraising cap of £500,000

EIS company conditions (from April 2026)

UK-incorporated company (or with a UK permanent establishment) carrying on a qualifying trade
Gross assets no more than £30 million before investment, £35 million after
Fewer than 500 full-time equivalent employees
Less than 7 years of trading (10 years for knowledge-intensive companies)
Company annual investment limit of £10 million (£20 million for KICs)
Lifetime limit of £24 million (£40 million for KICs)
Shares must be new, fully paid-up ordinary shares with no preferential rights

Excluded trades

Most commercial activities qualify, but certain sectors are excluded from both SEIS and EIS: property development, financial services (banking, insurance, money-lending), legal services, farming, forestry, hotels and guest houses, coal and steel production, and energy generation receiving government subsidies.

Software, technology, SaaS, AI, engineering, manufacturing, life sciences and consumer products all qualify. If you’re building a tech startup, you’re almost certainly in a qualifying trade.

SEIS and EIS Advance Assurance: How It Works

Advance assurance is a written confirmation from HMRC that your company meets the qualifying conditions for SEIS or EIS before you issue shares. It isn’t legally binding, but it gives investors confidence that their tax relief will be honoured — and most angel investors expect it.

The process

Prepare the application — We compile your company information, business plan, share structure, financial projections and details of the proposed share issue into HMRC’s required format.
Submit to HMRC — The advance assurance application is submitted to HMRC’s Small Company Enterprise Centre.
HMRC review — HMRC typically responds within 4 to 6 weeks, confirming whether the company qualifies.
Issue shares — Once you have advance assurance, you issue the shares to investors and submit a compliance statement (SEIS1 or EIS1) to HMRC.
HMRC issues certificates — HMRC reviews the compliance statement and issues SEIS3 or EIS3 certificates to each investor, which they use to claim tax relief on their Self Assessment return.

Critical timing

Apply for advance assurance before you start pitching to investors. If HMRC has questions or requests changes, you want that resolved before money is on the table. AccTek typically submits the advance assurance application alongside company formation or as soon as a fundraise is being planned.

What Changed for EIS From April 2026?

The Finance Act 2026 introduced the most significant expansion of EIS since the scheme’s creation. These changes primarily affect companies, not individual investor limits.

	Before April 2026	From April 2026
Company annual limit	£5 million	£10 million
KIC annual limit	£10 million	£20 million
Company lifetime limit	£12 million	£24 million
KIC lifetime limit	£20 million	£40 million
Gross assets (before)	£15 million	£30 million
Gross assets (after)	£16 million	£35 million
Employee limit	250 (500 for KICs)	500 (all companies)
Investor income tax relief	30%	30% (unchanged)

The practical impact: companies that previously “outgrew” EIS after a Series A or B round may now continue raising EIS-qualifying investment for longer. This is particularly relevant for knowledge-intensive companies in AI, biotech and deep-tech where capital requirements are high.

How AccTek Helps Startups With SEIS and EIS

SEIS and EIS aren’t just tax forms — they’re fundraising infrastructure. As your startup accountant, AccTek builds this infrastructure from day one so you’re always ready to raise.

Advance assurance applications — We prepare and submit SEIS/EIS advance assurance to HMRC, handling all the company documentation, share structure detail and business plan narrative.
Compliance statements — After shares are issued, we submit the SEIS1/EIS1 compliance statements to HMRC and manage the process through to SEIS3/EIS3 certificate issuance.
Investor-ready financials — Clean management accounts, cap table management, and financial models that give investors confidence. Built in Xero with real-time reporting.
Share structure advice — We advise on share classes, subscription agreements and anti-dilution mechanics to ensure SEIS/EIS eligibility is maintained.
Ongoing compliance — SEIS/EIS shares must be held for three years and the company must remain qualifying throughout. We monitor compliance conditions and flag risks proactively.
Integration with R&D tax relief — Many SEIS/EIS qualifying startups also claim R&D tax credits. We manage both schemes as part of a unified tax strategy.

Common SEIS/EIS Mistakes Founders Make

Issuing shares before advance assurance — If HMRC later determines the company didn’t qualify, your investors lose their tax relief. Always get advance assurance first.
Exceeding the SEIS gross asset limit — The £350,000 threshold is measured immediately before the share issue. If prior investment or retained profits push you over, the SEIS round fails.
Wrong share class — SEIS and EIS shares must be new, fully paid-up ordinary shares with no preferential rights on winding up or redemption. Preference shares don’t qualify.
Connected investor claims — EIS investors cannot be employees or directors who control the company (over 30%). Getting this wrong means the individual’s relief is denied.
Using the funds incorrectly — Raised capital must be used for the qualifying trade within specific timeframes. Using SEIS/EIS money for non-qualifying purposes risks the entire scheme.
Missing the compliance statement deadline — The SEIS1/EIS1 must be submitted to HMRC before your investors can receive their tax certificates. Delays cost investor goodwill.
Breaching the three-year hold period — If shares are sold within three years, income tax relief is clawed back from the investor. Company events like acquisitions or restructures can trigger this inadvertently.

SEIS and EIS FAQs

What is the difference between SEIS and EIS?

SEIS targets the earliest-stage startups with 50% income tax relief for investors, a company lifetime fundraising cap of £500,000, and stricter qualifying conditions. EIS is for more established growth companies with 30% income tax relief, company annual limits of up to £10 million (from April 2026), and higher asset and employee thresholds.

How much can a startup raise under SEIS?

A startup can raise up to £500,000 in its lifetime under SEIS. Individual investors can invest up to £200,000 per tax year across all their SEIS investments. The company must have gross assets under £350,000, fewer than 25 employees, and have been trading for less than three years.

What changed for EIS from April 2026?

The Finance Act 2026 doubled several EIS company limits. The annual investment limit increased from £5 million to £10 million (£20 million for knowledge-intensive companies). The lifetime limit rose from £12 million to £24 million (£40 million for KICs). Gross asset thresholds doubled to £30 million before and £35 million after investment. The employee limit increased to 500 for all companies.

What is SEIS advance assurance?

Advance assurance is a written confirmation from HMRC that your company qualifies for SEIS or EIS before you issue shares. It gives investors confidence that their tax relief will be honoured. HMRC typically responds within 4 to 6 weeks. AccTek prepares the advance assurance application as part of our fundraising support.

Can founders invest in their own company under SEIS?

Yes. Directors can invest in their own company under SEIS and claim full income tax relief, provided they hold no more than 30% of the company’s shares, voting rights or rights to assets. This is a key difference from EIS, where directors who control the company are generally excluded.

What tax relief do SEIS investors receive?

SEIS investors receive 50% income tax relief on investments up to £200,000 per tax year, 50% CGT reinvestment relief (a permanent exemption, not a deferral), full CGT exemption on gains from SEIS shares held for at least three years, and loss relief if the company fails.

What tax relief do EIS investors receive?

EIS investors receive 30% income tax relief on investments up to £1 million per tax year (£2 million if at least £1 million goes into knowledge-intensive companies), CGT deferral on gains reinvested into EIS shares, full CGT exemption on EIS share gains after three years, and loss relief. The EIS scheme runs until April 2035.

Which trades are excluded from SEIS and EIS?

Excluded trades include property development, financial services, legal services, farming, forestry, hotels and guest houses, energy generation receiving subsidies, and shipbuilding. Most technology, software, manufacturing, engineering and consumer product businesses qualify.

Need end-to-end SEIS/EIS support? Our fractional CFO service handles advance assurance, share class structuring, compliance certificates, and investor reporting — all integrated with your accounting.

Get SEIS/EIS Ready Before You Raise

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