The Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) underwrite a meaningful share of UK angel investment. For founders, getting SEIS and EIS right means access to a pool of investors who would not otherwise back unproven companies. Getting it wrong means clawback, broken caps, and angry shareholders. Here is how the schemes work in 2026 and what we manage for founders.
SEIS: the first GBP 250,000
SEIS supports the earliest stage of investment. Since April 2023, companies can raise up to GBP 250,000 under SEIS in their first three years of trade, with a gross asset cap of GBP 350,000 immediately before the share issue. Investors receive 50% income tax relief on investments up to GBP 200,000 per tax year, plus CGT exemption on gains from SEIS shares held for three years and CGT reinvestment relief on prior gains.
For a higher-rate-taxpaying angel writing a GBP 50,000 SEIS cheque, the effective net cost after income tax relief is GBP 25,000. The downside protection through loss relief brings worst-case net cost down to around GBP 13,500. That asymmetric risk profile is why SEIS works.
EIS: scaling to GBP 12m
Once SEIS is exhausted, EIS provides 30% income tax relief on investments up to GBP 1m per tax year (GBP 2m for knowledge-intensive companies), CGT deferral, and CGT exemption on disposal after three years. A company can raise up to GBP 5m per year under EIS and GBP 12m lifetime (GBP 20m for knowledge-intensive). The investment must be a new share subscription, not a secondary purchase.
The qualifying conditions you can fail without realising
SEIS and EIS have a long list of qualifying conditions. The ones we see founders trip over most:
- Trade: the company must carry on a qualifying trade. Property, financial services, legal services, hotels, nursing homes, and farming are excluded.
- Independence: the company must not be controlled by another company.
- Permanent establishment: the company must have a UK permanent establishment.
- Use of funds: funds must be used for a qualifying business activity within set time limits (usually two years).
- Risk to capital condition: the company must have objectives to grow and develop its trade in the long term, and the investment must carry significant risk of capital loss.
- Connected persons: investors and their associates cannot hold more than 30% of share capital, voting rights, or assets on a winding up.
Advance Assurance: do it before fundraising
We always advise founders to apply for HMRC advance assurance before approaching investors. Advance assurance is HMRC's pre-deal confirmation that, on the information provided, the company appears to qualify. It is not a binding ruling but it is what investors expect to see in the deck.
The application takes us about a week to assemble: business plan, financial forecasts, latest accounts, draft term sheet, and details of intended investors. HMRC typically responds in four to eight weeks.
The compliance statements
After investment, the company must wait at least four months from share issue (or until 70% of funds have been spent on the qualifying trade, whichever is earlier) before submitting an SEIS1 or EIS1 compliance statement. HMRC then issues SEIS2 / EIS2 authorisation, allowing the company to issue SEIS3 / EIS3 certificates to investors. Investors need these certificates to claim relief.
EMI: the matching share scheme for employees
Enterprise Management Incentives (EMI) options are the standard share scheme for SEIS / EIS-backed startups. Options can be granted up to GBP 250,000 per employee at the market value at the date of grant. On exercise and sale, gains are taxed at CGT rates (currently 14% BADR-eligible) rather than as employment income. The combination of EIS for investors and EMI for staff is the standard UK startup compensation stack.
The R&D tax credit overlay
Most SEIS / EIS companies also claim R&D tax relief. From April 2024, the merged scheme replaces the SME and RDEC regimes. Loss-making R&D-intensive SMEs (with R&D spend at 30%+ of total) retain enhanced support. We coordinate R&D claims alongside SEIS / EIS compliance.
How we work with founders
We provide end-to-end fundraise support: advance assurance applications, term sheet review, share issue mechanics, SEIS / EIS compliance statements, EMI option scheme drafting and HMRC valuation, and ongoing investor reporting. Business advisory sits alongside tax planning for the founders personally. Book a founder session or read our startup sector overview.