SEIS and EIS are HMRC venture capital schemes that offer tax reliefs to individuals who buy new shares in a qualifying company, which helps the company raise money. SEIS is for very small, early companies and EIS for larger, growing ones. The company must meet strict conditions and follow the rules for at least 3 years.
At a glance
- SEIS company limit
- Up to £250,000 raised in the company’s lifetime
- SEIS investor relief
- 50% Income Tax relief on up to £200,000 a year
- EIS investor relief
- 30% Income Tax relief on up to £1 million a year (£2 million if at least £1 million is in knowledge-intensive companies)
- EIS company limit
- Up to £10 million in 12 months and £24 million in the company’s lifetime
- Holding period
- At least 3 years for the full reliefs
- Compliance certificates
- SEIS3 or EIS3, needed by investors to claim
What are SEIS and EIS?
The Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) are HMRC schemes that offer tax reliefs to individuals who buy new shares in a qualifying company. For the company, they are a way to make its shares more attractive when it raises money.
GOV.UK describes the schemes as designed to help small or medium-sized companies grow by attracting investment. The company, the investor and the investment must all meet the conditions of the scheme used. This guide is written for the company raising money. Figures below are from GOV.UK guidance read in October 2026, and limits change, so check the current pages before you rely on them.
Capzy does not give tax, legal, accounting or investment advice, and this page is not a recommendation to invest. Ask an accountant or solicitor about your own position.
How do SEIS and EIS compare?
SEIS is for very small, young companies and gives investors a higher rate of relief on a smaller sum, while EIS suits larger, growing companies and allows far more to be raised. The table compares the two as GOV.UK describes them.
| SEIS | EIS | |
|---|---|---|
| Most a company can raise | £250,000 in its lifetime | £10 million in any 12 months, £24 million in its lifetime |
| Company age | Less than 3 years old | Within 7 years of its first commercial sale |
| Gross assets | No more than £350,000 | No more than £30 million before the share issue, £35 million after |
| Employees | Fewer than 25 full-time equivalent | Fewer than 250 full-time equivalent |
| Investor Income Tax relief | 50% of the investment | 30% of the investment |
| Most an investor can claim relief on each year | £200,000 | £1 million, or £2 million if at least £1 million is in knowledge-intensive companies |
A company cannot use SEIS if it has already had investment through EIS or a venture capital trust, and once shares are issued under EIS it cannot issue shares under SEIS. Many companies that use both start with SEIS and move to EIS later, but whether that suits you is a question for your adviser.
Which companies can use SEIS?
A company can use SEIS if it carries out a new qualifying trade, is established in the UK and stays within the size limits when the shares are issued. HMRC’s guidance also sets out these conditions.
- It is not listed on a recognised stock exchange and has no arrangements to become a quoted company.
- It has not been controlled by another company since incorporation.
- It is not a member of a partnership.
- If its trade is already running, that trade has not been carried on for more than 3 years.
- It meets the risk to capital condition, explained below.
The money raised must be spent within 3 years of the share issue, on a qualifying trade, on preparing to carry one out or on research and development expected to lead to one.
Which companies can use EIS?
A company can use EIS if it has a permanent establishment in the UK, carries out a qualifying trade and stays within the age, size and funding limits. It must not be controlled by another company or listed on a recognised stock exchange when the shares are issued.
The money raised must be used for a qualifying business activity and spent within 2 years of the investment, or the date trading started if later. It must not be used to buy all or part of another business, and it must be used to grow or develop the business.
There are different limits for companies registered in Northern Ireland that trade in goods or the wholesale electricity market, which GOV.UK calls specified companies, and for knowledge-intensive companies that carry out significant research, development or innovation. If either might apply to you, read the GOV.UK pages in the sources. Our page on business loans in Northern Ireland covers debt finance for businesses there.
Which trades and uses of money do not qualify?
Most trades qualify, including research and development that leads to a qualifying trade, but a company may not qualify if more than 20% of its trade falls into an excluded activity. GOV.UK lists examples:
- Coal or steel production, and farming or market gardening
- Leasing activities and property development
- Legal or financial services, and banking, insurance, debt or financing services
- Running a hotel or a nursing home
- Generating energy or producing gas or other fuel, and exporting electricity
The full list is in the HMRC Venture Capital Schemes Manual, so check the detail for your trade before you plan a raise.
What reliefs do investors get?
Investors can claim Income Tax relief on the amount invested, and they may also get Capital Gains Tax relief and loss relief. The reliefs are claimed by the investor, but their size is a big part of why a company uses the schemes.
| Relief | SEIS | EIS |
|---|---|---|
| Income Tax relief | 50%, on up to £200,000 a year | 30%, on up to £1 million a year |
| Gains when shares are sold | Exempt from Capital Gains Tax if Income Tax relief was received and not withdrawn, and shares were held for the minimum period of at least 3 years | The same condition applies |
| Reinvesting a gain | Relief on 50% of the investment, up to £200,000, so at most £100,000 | Deferral of Capital Gains Tax on any gain invested |
| If shares are sold at a loss | Loss can be set against income, less relief already given | The same applies |
Investors must keep their whole investment for at least 3 years to claim the full reliefs. Relief is lost if they sell, if the company stops meeting the conditions or if they become connected to the company, for example by holding more than 30% of its shares. Investors who invest should do their own due diligence and take their own advice.
How does the process work for the company?
The company issues shares, submits a compliance statement to HMRC and, once HMRC agrees, gives each investor a compliance certificate. The steps run in this order:
- Optional: ask for advance assurance. You can ask HMRC whether your proposed share issue is likely to qualify. It applies to the specific investment, and it is not a general endorsement of the company.
- Issue the shares. Follow the share and risk rules above.
- Submit a compliance statement. Use form SEIS1 or EIS1 for each share issue. For SEIS you can submit once the company has carried on the new trade for at least 4 months or has spent at least 70% of the money raised. For EIS the qualifying activity must have run for 4 months.
- Receive HMRC’s authorisation. If HMRC agrees, it issues a letter of authorisation and a unique investment reference.
- Give investors their certificates. The company issues form SEIS3 or EIS3, and investors need it with the reference to claim relief.
A director, the company secretary or an agent can submit. If you use an agent, they need a signed letter dated within the last 3 months.
What happens if the company breaks the rules?
Tax relief is withheld or withdrawn from the investors if the company does not follow the scheme rules for at least 3 years after the investment. That falls on the investors, not only the company, which is why a breach damages relationships as well as finances.
For EIS, the company must tell HMRC within 60 days if it no longer meets the conditions. A breach can happen through an ordinary business decision, such as how the money is spent, so keep records and check changes with your adviser before acting.
How do equity raising and debt finance fit together?
Equity and debt do different jobs: equity brings in investors who own part of the company and are not repaid on a schedule, while debt is repaid with interest and leaves ownership unchanged. Some companies use both at different stages.
To compare the routes, read our guides to angel investment, crowdfunding for business and venture debt. Companies that are not ready for investors can also read about start up business loans.
Where does Capzy fit in?
Capzy is a credit broker, not a lender, and is paid by the lender. We arrange debt finance, not investment: we do not raise equity, we do not promote investing and we cannot advise on SEIS or EIS.
If a loan could complement your plans, you can check your funding options with a soft search that does not affect your credit score. Any offer is subject to status and lender criteria.
Sources
- Use a venture capital scheme to raise money for your company, GOV.UK
- Apply to use the Seed Enterprise Investment Scheme to raise money for your company, GOV.UK
- Apply to use the Enterprise Investment Scheme to raise money for your company, GOV.UK
- Tax relief for investors using venture capital schemes, GOV.UK
- Apply for advance assurance on a venture capital scheme, GOV.UK
Capzy is a credit broker, not a lender. We get paid by the lender. This page is general information, not financial, tax or legal advice. Finance is subject to status, lender criteria and affordability; rates and terms depend on your circumstances.