Business Owners · Reliefs and incentives
EIS and SEIS: raising investment with tax relief for investors
How EIS and SEIS help early-stage companies raise money and give investors tax relief, with the limits that apply from 6 April 2026.
On this page11 sections
Key points
- 1Investors get income tax relief of 30% (EIS) or 50% (SEIS)
- 2EIS company limits were doubled from 6 April 2026
- 3Advance assurance shows investors a share issue is likely to qualify
- 4Relief can be withdrawn if the rules are broken in the first three years
For a young company, investor money is often the difference between an idea and a business. EIS and SEIS can make that money easier to raise, because they give individual investors generous tax relief when they back qualifying companies. They are also unforgiving schemes, with conditions on the company, the shares, the investor and the way the money is spent. We help founders raise with confidence and investors claim safely.
Who this is for
This page is for founders and directors planning a fundraise, and for investors considering one. Companies that benefit tend to be early-stage trading businesses in technology, life sciences, manufacturing, hospitality, media and many other sectors. Investors are typically higher-rate taxpayers looking for tax relief on high-risk investments.
If you are building something technical, pair this with R&D tax credits, which can reduce your costs while EIS or SEIS reduces your cost of capital.
The two schemes side by side
| SEIS | EIS | |
|---|---|---|
| Aimed at | Very early-stage companies | Growing companies |
| Investor income tax relief | 50% | 30% |
| Annual investor limit | £200,000 | £1 million (£2 million if the excess is in knowledge-intensive companies) |
| Company can raise | Up to £250,000 | Up to £10 million a year and £24 million over its lifetime (£20 million and £40 million for knowledge-intensive companies) |
| Gross assets | Up to £350,000 | Up to £30 million before, £35 million after |
| Employees | Fewer than 25 | Fewer than 250 |
| Age of trade | No more than 3 years | Within 7 years of first commercial sale |
The EIS company limits were doubled for shares issued from 6 April 2026. Some figures in older guides and on older websites are now out of date, so check any number you see against the current GOV.UK guidance.
Company conditions in more detail
For EIS, the company must be a trading company with a UK permanent establishment, independent of other companies, and generally carrying on a qualifying trade. It must have fewer than 250 full-time equivalent employees when the shares are issued, gross assets within the limits above, and be within seven years of its first commercial sale. Older companies can sometimes qualify if the money is for a new product or market and is at least half the company's average annual turnover over the last five years.
For SEIS, the company must be earlier still: no more than three years into the trade, with gross assets of up to £350,000 and fewer than 25 full-time equivalent employees. A company that has already had EIS or venture capital trust money cannot use SEIS.
The money raised must be spent on the qualifying trade within the time allowed, two years for EIS from the investment or the start of trading, and three years for SEIS. Some activities are excluded altogether, so we always confirm what the company really does before preparing documents.
Advance assurance in practice
Advance assurance is HMRC's opinion on whether a proposed share issue is likely to meet the conditions of EIS or SEIS. The application is made online, with a separate application for each proposed investment. HMRC asks for the business plan and forecasts, latest accounts, the articles, the register of members, draft investor documents and an explanation of the risk to capital condition.
If assurance is given, you receive a statement you can show to investors. It is not a guarantee: it does not confirm that an individual investor qualifies, it is not an endorsement of the business, and it applies only to what you described. If the deal changes, you must report it. We prepare the application so that it matches the real transaction.
What investors get
EIS investors receive 30% income tax relief, the ability to defer capital gains tax on gains reinvested in EIS shares, a capital gains exemption on a qualifying gain after three years, and loss relief if the investment fails. SEIS investors receive 50% income tax relief, a reinvestment relief for capital gains, a gain exemption after three years and loss relief.
Investors cannot claim until they hold the compliance certificate for the share issue. Reliefs can be withdrawn if the company breaks the rules during the three-year period.
The fundraising process
- Eligibility review. We check the trade, group structure, funding history, gross assets, employees and any excluded activity.
- Advance assurance. Optional but widely expected by investors. HMRC gives an opinion that a share issue is likely to qualify; it is not an endorsement of the business.
- Structuring the round. Share classes, articles, investor documents and the order of SEIS and EIS rounds.
- Issue and spend. Shares must be issued for cash and the money spent for the trade within the time allowed.
- Compliance statement. The company files EIS1 or SEIS1, and HMRC authorises investor certificates.
- Three years of care. Changes to the business, share rights or ownership are checked against the rules.
Common mistakes
- Giving investors protection. Guarantees, put options or assured exits can end the claim.
- Raising before checking prior funding. Earlier rounds can use up or block the limits.
- Founder-friendly share rights that investors cannot use. Some preferential rights are not allowed.
- Spending outside the qualifying trade. Funds must be used for the purpose stated.
- Forgetting the three years. A buy-back, a loan to a shareholder or a restructure can ruin relief.
- Using stale limits. Many online guides still show the pre-April 2026 numbers.
How we help
For companies, we review eligibility, prepare advance assurance applications, review articles and investor documents, file the compliance statements and watch the three-year period. For investors, we check that a proposed investment fits your tax position and how the reliefs will be claimed. We also advise on how EIS or SEIS fits with EMI options, holding company structures and a future exit.
Why ASWATAX
You work directly with a Chartered Tax Adviser, Omar Aswat, who will speak with your investors' advisers too if needed. Our advice is commercial and straightforward. We tell you if a scheme is the wrong fit before you spend time on it.
Talk to us
Planning a round, or weighing up an investment? Book a free first call. We reply the same working day.
01 · Guide in progress
The EIS and SEIS Fundraising Guide
What founders and investors need to know about eligibility, advance assurance and keeping relief safe.
Talk it through instead
Our The EIS and SEIS Fundraising Guide is being written. In the meantime, a 20-minute call with a Chartered Tax Adviser is free.
Book a free callWe reply the same working day.
Often handled together.
- ServiceR&D Tax CreditsHow the merged R&D expenditure credit and ERIS work for accounting periods from 1 April 2024, and how to claim without inviting an HMRC enquiry.Read the page
- ServicePatent BoxHow the Patent Box gives a 10% corporation tax rate on profits from patented inventions, who can claim it, and how it sits alongside R&D relief.Read the page
- ServiceThe Business LifecycleA stage-by-stage map of the tax decisions a business owner faces, from start-up structure to exit and succession, with links to the service for each.Read the page
- ServiceExit PlanningTax planning in the years before you sell, including Business Asset Disposal Relief at 18% from 6 April 2026, so that more of the sale price reaches you.Read the page
From the journal.
Questions, answered.
Straight answers to what clients ask us most. Your own situation may differ, so treat them as a starting point.
Q1What is the difference between EIS and SEIS?
SEIS is for very early companies and gives investors 50% income tax relief on up to £200,000 a year. EIS is for growing companies and gives 30% relief on up to £1 million a year, or £2 million if at least £1 million goes into knowledge-intensive companies. SEIS companies can raise up to £250,000. EIS companies can raise far more, subject to annual and lifetime limits.
Q2How much can my company raise under EIS?
For shares issued from 6 April 2026, most companies can raise up to £10 million in any 12 months and £24 million over the company's lifetime. The limits for knowledge-intensive companies are £20 million and £40 million. These amounts count all venture capital scheme money. Companies registered in Northern Ireland with certain trades in goods or electricity stay on the older, lower limits.
Q3What are the company conditions for EIS?
In outline, the company must be a trading company with a UK permanent establishment, have fewer than 250 full-time equivalent employees, and have gross assets of no more than £30 million before the issue and £35 million after. It must normally be within seven years of its first commercial sale, and spend the money within two years. Several activities are excluded.
Q4What are the company conditions for SEIS?
The company must have gross assets of no more than £350,000 and fewer than 25 full-time equivalent employees when shares are issued, and be carrying out a new qualifying trade that is no more than three years old. It can raise up to £250,000 through SEIS in total. It cannot previously have received EIS or venture capital trust money.
Q5What is advance assurance and do I need it?
Advance assurance is HMRC's opinion, given before you raise money, that a proposed share issue is likely to qualify. It is not compulsory, but most investors expect it. It does not confirm that any individual investor qualifies and is not an endorsement of the investment. You make a separate application for each proposed investment, so changes to the deal should be reported.
Q6How long does advance assurance take?
HMRC does not publish a fixed decision time, and an incomplete application may be rejected without feedback. It is better to treat it as a few weeks' work from a good application, and to allow for follow-up questions. Because investor discussions often run to a deadline, we prepare the business plan, forecasts and share documents early so the application is complete the first time.
Q7What is the risk to capital condition?
HMRC will not give relief where an investment appears designed mainly to secure tax relief, with limited real risk. The company must have genuine objectives to grow and develop its business in the long term, and the investor's capital must be genuinely at risk. Arrangements that protect investors from loss, such as guarantees or assured exits, can undermine the claim.
Q8What happens after the shares are issued?
The company submits a compliance statement to HMRC, form EIS1 or SEIS1, once the trade has run for four months, or for SEIS once at least 70% of the money is spent. If it is accepted, HMRC authorises the company to issue investor certificates, EIS3 or SEIS3. Investors need these certificates and the investment reference number to claim their reliefs.
Q9How long must the company follow the rules?
At least three years from the investment, and you must tell HMRC within 60 days if you stop meeting the conditions. Investors must also hold the shares for the minimum period. Breaking the rules can lead to relief being withheld or withdrawn, often from the investors, so a seemingly routine step such as a share buy-back or a new loan can have an expensive effect.
Q10What tax relief do EIS investors receive?
Income tax relief of 30% on up to £1 million a year, or £2 million if the excess above £1 million goes into knowledge-intensive companies. They can defer capital gains tax on gains reinvested in EIS shares, claim a gain exemption on a qualifying disposal after three years, and claim loss relief if the shares are lost. There is no relief on dividends from the shares.
Q11What tax relief do SEIS investors receive?
Income tax relief of 50% on up to £200,000 a year, capital gains tax reinvestment relief on part of a gain that is reinvested in SEIS shares, exemption on a qualifying disposal gain after three years and loss relief if the investment fails. The annual limit is the amount invested, not the relief. Investors cannot have a substantial interest in the company.
Q12Can I raise SEIS first and then EIS?
Yes, and that is a common path. A company can raise SEIS funding and later raise EIS money, though the order and timing matter, and the SEIS money must generally be largely spent first. The amounts also count towards the overall funding limits. We map the sequence of rounds so that an early round does not block a later one.
Q13Are founders able to claim EIS or SEIS relief on their own shares?
Usually not. An investor who is connected with the company, for example by being a significant shareholder or a paid director, is generally excluded from relief. Some limited exceptions exist for directors. Founders and early employees should not assume they can use the schemes for their own shares, and should take advice before subscribing.
Q14Can a company with employee options still use EIS or SEIS?
Yes, but the interaction needs care. Options and share schemes affect the shareholding and the 'connected' tests, and share rights must meet the conditions. Preferred rights that give an investor protection can also cause problems. We coordinate EIS and SEIS fundraising with any EMI or other option scheme so one does not undermine the other.
Q15What if my company's activity is excluded from EIS?
Certain trades are excluded, including some financial activities, property development and parts of the leasing and hotel sectors. Then EIS and SEIS money cannot be raised on those activities, although a different structure may isolate a qualifying trade. We look at what the company really does, not just how it describes itself, before you spend money on documents.
05 · Next step
Talk it through with Omar.
The first call is free. You'll speak to a Chartered Tax Adviser, and leave with a clear view of your options.
We reply the same working day.
